Principles of Microeconomics
7th Edition
ISBN: 9781305156050
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 10, Problem 6CQQ
To determine
Relevance of externality.
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Students have asked these similar questions
The Coase theorem does NOT apply if
a. There is a significant externality between two parties.
b. The court system vigorously enforces all contracts.
c. transaction costs make negotiating difficult.
d.both parties understand the externality fully.
An externality is
Select one:
a. the uncompensated impact of one person's actions on the well-being of a bystander.
b. a market equilibrium tax.
c. the costs that parties incur in the process of agreeing and following through on a bargain.
d. the proposition that private parties can bargain without cost over the allocation of resources.
An externality is the impact of:
a.
None of the answers is correct.
b.
one person’s actions on the well-being of another person
c.
a person’s actions on his well-being.
Chapter 10 Solutions
Principles of Microeconomics
Ch. 10.1 - Prob. 1QQCh. 10.2 - Prob. 2QQCh. 10.3 - Prob. 3QQCh. 10 - Prob. 1CQQCh. 10 - Prob. 2CQQCh. 10 - Prob. 3CQQCh. 10 - Prob. 4CQQCh. 10 - Prob. 5CQQCh. 10 - Prob. 6CQQCh. 10 - Prob. 1QR
Ch. 10 - Prob. 2QRCh. 10 - Prob. 3QRCh. 10 - Prob. 4QRCh. 10 - Prob. 5QRCh. 10 - Prob. 6QRCh. 10 - Prob. 1PACh. 10 - Prob. 2PACh. 10 - Prob. 3PACh. 10 - Greater consumption of alcohol leads to more motor...Ch. 10 - Prob. 5PACh. 10 - The many identical residents of Whoville love...Ch. 10 - Prob. 7PACh. 10 - Prob. 8PACh. 10 - Prob. 9PACh. 10 - Prob. 10PA
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Similar questions
- An externality Select one: a. all answers are correct b. arises when property rights don’t exist or can’t be enforced. c. is a benefit or cost to parties who are not involved in a transaction. d. can be positive or negative.arrow_forwardA negative externality causes Select one: a. the social cost of production to be greater than the private cost. b. the social cost of production to be the same as the private cost. c. None of the answers are correct d. the social cost of production to be less than the private cost.arrow_forwardWhy is a price change NOT an externality? Select one: a. A price change affects bystanders, not market participants. b. A price change does NOT change total costs or benefits, it only changes who buys the good. c. A change in price changes the marginal benefit of a good but does NOT change who buys and sells the good. d. A price change redistributes costs but not benefits.arrow_forward
- An externality is Select one: a. a market equilibrium tax. b. the costs that parties incur in the process of agreeing and following through on a bargain. c. the uncompensated impact of one person's actions on the well-being of a bystander. d. the proposition that private parties can bargain without cost over the allocation of resources. Checkarrow_forwardSpillovers or externalities: a. have been legislated out of existence. b. relate to both costs and benefits. c. None of the Above d. relate to benefits only. e. relate to costs only.arrow_forwardIf people took external benefits, such as cleaner air, into consideration when deciding how much to consume of goods that cause externalities: I. they would consume less II. they would act in a way that is optimal from a societal perspective. III. the markets for these goods would generate greater surplus. Multiple Choice II and II only I,II, and II I and II only I and III onlyarrow_forward
- Consider a market with a positive externality. The market will tend to.... the good because the market participants tend to ignore the.... of their decision. A. underproduce; external social benefit B. overproduce; external social benefit C. underproduce; private benefit D. overproduce; private benefit Explain why.arrow_forward1.A good with a negative externality is an example of a market failure because * a.The price does not fluctuate with supply and demand. b.The price of the product does not reflect the social cost. c.A good can be consumed by many people without them having to pay for it. d.The market is producing a good very few people want. 2.A good with a negative externality is an example of a market failure because * a.The price does not fluctuate with supply and demand. b.The price of the product does not reflect the social cost. c.A good can be consumed by many people without them having to pay for it. d.The market is producing a good very few people want.arrow_forwarda. When a firm imposes an external social cost (negative externality), the government should impose a tax on production equal to the externality cost to ensure that the market will achieve the socially optimal outcome. Select one: True False b. The socially optimal level of emissions of most pollutants is zero. Select one: True False c. Externalities are only inefficient when they impose a cost. They are not inefficient when they bestow a benefit. Select one: True Falsearrow_forward
- What is the concept of a negative externality in economics? A. A benefit received by individuals who did not incur the cost B. A cost incurred by individuals who did not receive the benefit C. A situation where external parties receive equal benefits and costs D. A situation where the government intervenes in the marketarrow_forwardA neighborhood homeowners' association charges a fee when residents make loud noise from 9 p.m. until 7 a.m. This is similar to using _____ to reduce externalities from noise. Select one: a. command and control regulations treat everyone the same regardless of circumstances. b. a corrective tax to reduce a negative externality c. cap and trade to increase a positive externality d. a government subsidy to reduce a price floorarrow_forwardQuestion 19 Which of the following best captures the notion of external cost? a. Drugs damage the health of the user. b. Floods reduce the output of commercial farms. c. Passive smoking damages the health of nearby non-smokers. d. a smaller harvest leads to lower income for farmers. Question 20 The optimal level of output can be achieved by levying a tax on a company producing a negative externality. This should be set a level that is equal to: a. the marginal cost of a curve b. the social marginal cost curve c. the difference between the social marginal cost and the firm's marginal cost. d. the total of the social marginal cost and the firm's marginal cost. Question 21 If we assume that making and consuming a product leads to externalities, which of the following would be the Pareto efficient level? a. If marginal private benefit matches marginal social benefit. b. If marginal social cost matches marginal social benefit. c. If marginal private cost matches marginal private benefit. d.…arrow_forward
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