Externalities and the Environment

2. 11 Externalities and the Environment CLICKER QUESTIONS

3. Checkpoint 11.2 Checkpoint 11.1 Question 1 Question 6 Question 2 Question 7 Question 8 Question 3 Question 9 Question 4 Question 10 Question 5

4. CHECKPOINT 11.1 Question 1 The cost of producing an additional unit of a good or service that is borne by the producer of that good or service _________. • equals the consumer’s marginal benefit from that good or service • equals the cost borne by people other than the producer • is the marginal private cost • is the external cost • is the marginal social cost

5. CHECKPOINT 11.1 Question 2 If the marginal private cost of producing one kilowatt of power is 10¢ and the marginal social cost of each kilowatt hour is 14¢, then the marginal external cost is ____ a kilowatt hour. • 10¢ • 19¢ • 4¢ • 0¢ • 14¢

6. CHECKPOINT 11.1 Question 3 The figure shows the market for a good with an external cost. The external cost is _______ and the efficient quantity is ____ a year. • $10 a ton; 0 tons • $5 a ton; 100 tons • $10 a ton; 200 tons • $20 a ton; 400 tons • $10 a ton; 100 tons

7. CHECKPOINT 11.1 Question 4 If a firm that pollutes is forced to pay a pollution charge, then __________. • the firm increases the quantity supplied of the good • the demand for the firm’s output decreases • the firm increases its supply of the good • the firm decreases its supply of the good • Both the firm’s supply of the good and the demand for the good decreases

8. CHECKPOINT 11.1 Question 5 A marketable pollution permit _________. • allows firms to pollute all they want without any cost • allows firms to buy and sell the right to pollute at government controlled prices • eliminates pollution entirely • allows firms to buy and sell the right to pollute • is the Coase solution to the pollution problem

9. CHECKPOINT 11.2 Question 6 The tragedy of the commons is the absence of incentives to _______. • correctly measure the marginal cost of using the resource • prevent underutilization of the common resource • prevent overuse and depletion of the common resource • discover the resource • prevent the free-rider problem

10. CHECKPOINT 11.2 Question 7 For a common resource, the marginal private benefit from a given quantity of the resource is _______. • greater than the marginal social benefit • equal to the marginal social benefit • less than the marginal social benefit • not related to the marginal social benefit • not defined because the resource is nonexcludable

11. CHECKPOINT 11.2 Question 8 Efficient use of a common resource requires that its ____. • marginal private benefit equals marginal cost • marginal social benefit equals marginal cost • marginal private benefit equals marginal social benefit • marginal private cost equals marginal cost • marginal private benefit equals marginal social cost

12. CHECKPOINT 11.2 Question 9 The figure shows a market for logs from a tropical rainforest. The efficient number of loggers is ____ and if the market is unregulated, the number of loggers is ____. • 0; 100 • 0; 150 • 150; 100 • 100; 0 • 100; 150

13. CHECKPOINT 11.2 Question 10 If the government assigns private property rights to a common resource, then ________. • the resource will be underutilized • the marginal social benefit becomes the marginal private benefit • the government must set a quota to achieve efficient use • the resource becomes a private good and cannot be used • a free-riding problem will emerge