QUESTION 1With negative externalities, the social cost includesa. public cost & opportunity costO b. private cost & external costOc. external cost & opportunity costOd. internal cost & private costQUESTION 2Assume the following:Social Cost = $150. Private Cost = $125What must the external cost equal?Oa. $275O b. $25O c. $0O d. $150QUESTION 3Altering incentives so that people take into account the external effects of their actions is known asO a. changing the gameO b. rigging the systemOc. internalizing the externalityOd. stacking the deckQUESTION 4Assume the following:market quantity> socially desirableThe inequality above describes which of the following?Oa. Negative ExternalityOb. Positive ExternalityOc. Budget DeficitOd. Budget SurplusAssume the following:market quantity < socially desirableThe inequality above describes which of the following?Oa. Budget SurplusO b. Positive Externalityc. Budget DeficitO d. Negative ExternalityQUESTION 6In order to internalize a negative externality the government should implement aO a.subsidyO b. free for allO c. bidding warO d. taxQUESTION 7In order to internalize a positive externality the government should implement aa. minimum wageb. taxOc. subsidyO d. spoils systemOb. Coase TheoremOC. Smith TheoremOd. Folk TheoremQUESTION 8O b. Decrease in supplyc. Decrease in demandOd. Increase in supplyWhich of the following isO a. Pigovian TaxO b. Adjustment TaxOc. Proper TaxOd. Coase TaxQUESTION 16a corrective tax that aligns private incentives with society's interest?QUESTION 9The value of a corrective tax, aimed at internalizing a negative externality, should equalO a. the willingness to payOb. the willingness to saleO c. 10% of the polluter's monthly incomeO d. the amount of the external costQUESTION TO™ -Which of the following types of firms are likely to respond to a corrective tax by reducing their pollution emissions?Oa. Firms with high abatement costsOb. Firms that love the environmentOc. Firms that want a boost to their public imageOd. Firms with low abatement costsQUESTION 11In a tradable pollution permits system which of the following types of firms are likely to do most of the pollution reduction?Oa. Firms with high cost of reducing pollutionOb. Firms with low cost of reducing pollutionOc. Firms that pay low wagesOd. Firms that pay high wagesQUESTION 12QUESTION 12Which of the following argues for private solutions to externalities?Oa. Pigovian TheoremWhich of the following argues for private solutions to externalities?Oa. Pigovian TheoremOb. Coase TheoremOC. Smith TheoremOd Enik ThanramQUESTION 13Which of the following is the initial impact of implementing a corrective tax aimed at correcting the market failure of a negativeexternality?a. Increase in demandQUESTION 14What is the ultimate outcome of implementing a corrective tax aimed at correcting the market failure of a negative externality?Oa. Higher price and higher quantityO b. Lower price and lower quantityOc. Lower price and higher quantityOd. Higher price and lower quantityQUESTION 15Which of the following is a reason why private solutions are often ineffective at remedying externalities?Oa. All parties want credit, but do not want to do any of the work.O b. The question is decieving because they are actually quite effective.Oc. People are stubburn. The bargaining simply breaks down.O d. Greedy businesspeople would rather pay greedy politicians taxes instead of handling the matter privately.Corrective taxes and tradable pollution permits are which type of policies?Oa. Government-basedO b. Corporation-basedOc. Market-basedOd. Socially-based

Externalities are side effects of economic activities which are borne by the third parties. The…

nt should implement a Oc. Lower price and higher quantity C. Od. Higher price and lower quantity QUESTION 15 Which of the following is a reason why private solutions O a. All parties want credit, but do not want to do any Ob. The question is decieving because they are actua c. People are stubburn. The bargaining simply breal O d. Greedy businesspeople would rather pay greedy

nt should implement a Oc. Lower price and higher quantity C. Od. Higher price and lower quantity QUESTION 15 Which of the following is a reason why private solutions O a. All parties want credit, but do not want to do any Ob. The question is decieving because they are actua c. People are stubburn. The bargaining simply breal O d. Greedy businesspeople would rather pay greedy

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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