Assume your neighbor throws trash in his yard. He gets $50 worth of benefit from littering, which imposes a $90 cost to you. According to Coase, you should? pay your neighbor $40 to clean up his yard. offer to clean his yard for $40. deal with it. offer him between $51 and $90 if he will keep his yard clean. Negative externalities lead to? maximum efficiency. inefficiency. minimum efficiency. compensation. Usually the cost of preventing an external cost is less than the cost of correcting it after it has occurred. True False Which of the following statements is not true? Establishing property rights may be a way to internalize an externality. Internalizing an externality is not the same as inducing the producer of an externality to consider both private and social costs in production decisions. If the producer produces the socially optimal output level, the externality is internalized. The producer calculates all costs and benefits into production decisions. Derived demand for labor means that when a firm hires labor, it has to derive its demand mathematically. based on the labor supply. from the demand for the product that the labor produces. based on the minimum wage. A high elasticity of demand for for labor means that A small change in the wage rate causes a smaller percentage change in the quantity of labor demanded. A small change in the wage rate causes the same percentage change in the quantity of labor demanded. A small change in the wage rate causes no change in the quantity of labor demanded. A small change in the wage rate causes a larger percentage change in the quantity of labor demanded. The internalization of a negative externality from a particular production process will cause the market demand curve to shift to the right. the market demand curve to shift to the left. the market demand curve to stay the same. There is not enough information to answer the question. A positive externality can be unintentional. intentional. aesthetic. all of th
Assume your neighbor throws trash in his yard. He gets $50 worth of benefit from littering, which imposes a $90 cost to you. According to Coase, you should? pay your neighbor $40 to clean up his yard. offer to clean his yard for $40. deal with it. offer him between $51 and $90 if he will keep his yard clean. Negative externalities lead to? maximum efficiency. inefficiency. minimum efficiency. compensation. Usually the cost of preventing an external cost is less than the cost of correcting it after it has occurred. True False Which of the following statements is not true? Establishing property rights may be a way to internalize an externality. Internalizing an externality is not the same as inducing the producer of an externality to consider both private and social costs in production decisions. If the producer produces the socially optimal output level, the externality is internalized. The producer calculates all costs and benefits into production decisions. Derived demand for labor means that when a firm hires labor, it has to derive its demand mathematically. based on the labor supply. from the demand for the product that the labor produces. based on the minimum wage. A high elasticity of demand for for labor means that A small change in the wage rate causes a smaller percentage change in the quantity of labor demanded. A small change in the wage rate causes the same percentage change in the quantity of labor demanded. A small change in the wage rate causes no change in the quantity of labor demanded. A small change in the wage rate causes a larger percentage change in the quantity of labor demanded. The internalization of a negative externality from a particular production process will cause the market demand curve to shift to the right. the market demand curve to shift to the left. the market demand curve to stay the same. There is not enough information to answer the question. A positive externality can be unintentional. intentional. aesthetic. all of th
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Assume your neighbor throws trash in his yard.
He gets $50 worth of benefit from littering, which
imposes a $90 cost to you.
According to Coase, you should?
pay your neighbor $40 to clean up his yard.
offer to clean his yard for $40.
deal with it.
offer him between $51 and $90 if he will keep his yard clean.
Negative externalities lead to?
maximum efficiency.
inefficiency.
minimum efficiency.
compensation.
Usually the cost of preventing an external cost is less than the cost of correcting it after it has occurred.
True
False
Which of the following statements is not true?
Establishing property rights may be a way to internalize an externality.
Internalizing an externality is not the same as inducing the producer of an externality to consider both private and social
costs in production decisions.
If the producer produces the socially optimal output level, the externality is internalized.
The producer calculates all costs and benefits into production decisions.
Derived demand for labor means that when a firm hires labor, it has to derive its demand
mathematically.
based on the labor supply.
from the demand for the product that the labor produces.
based on the minimum wage.
A high elasticity of demand for for labor means that
A small change in the wage rate causes a smaller percentage change in the quantity of labor demanded.
A small change in the wage rate causes the same percentage change in the quantity of labor demanded.
A small change in the wage rate causes no change in the quantity of labor demanded.
A small change in the wage rate causes a larger percentage change in the quantity of labor demanded.
The internalization of a negative externality
from a particular production process will cause
the market demand curve to shift to the right.
the market demand curve to shift to the left.
the market demand curve to stay the same.
There is not enough information to answer the question.
A positive externality can be
unintentional.
intentional.
aesthetic.
all of the above
Which of the following would create an
external benefit?
smoking in a restaurant
jogging
planting a flower garden
B and C.
The main feature of a progressive tax system is that the higher one's income, the
more taxes
higher the tax rate one pays.
less taxes
lower the tax rate
Which of the following would be considered a solution to automobile air pollution by applying the principle of the second
best?
The government imposes an excise tax on each automobile.
The government fines the automobile manufacturers for the cost of cleaning up the pollution.
The government requires automobile manufacturers to put anti-pollution devices on automobiles.
The government sells tradable pollution permits.
one pays.
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