A. Sets the quantity of pollution
B. reduces the incentive for technological innovations to further reduce pollution
C. Sets the price of pollution
D. determines the demand for pollution rights.
Externality & Internality
When an individual buys a car in a congested urban area, it generates ?
A. a positive externality
B. a technology spillover
C. an efficient market outcome.
D. a negative externality
The gas-guzzler tax that is placed on new vehicles that are very fuel inefficient is an example of ?
A. a tradeable pollution permits.
B. an attempt to internalize a positive externality
C. an application of the Coase theorem
D. an attempt to internalize a negative externality.
To internalize a negative externality an appropriate public policy response would be to ?
A. have the government take over the production of the good causing the externality
B. ban the production of all goods creating negative externalities
C. tax the good
D. subsidize the good
An externality is ?
A. the benefit that accrues to the buyer in a market
B. the cost that accrues to the seller in a market
C. none of these answers
D. the compensation paid to a firm’s external consultants.
E. The uncompensated impact of one person’s actions on the well-being of a bystander
A negative externality (that has not been internalized) causes the ?
A. optimal quantity to exceed the equilibrium quantity.
B. equilibrium quantity to be either above or below the optimal quantity
C. equilibrium quantity to equal the optimal quantity
D. equilibrium quantity to exceed the optimal quantity
Tradable pollution permits ?
A. reduce the incentive for technological innovations to further reduce pollution.
B. set the price of pollution.
C. determine the demand for pollution rights.
D. Set the quantity of pollution
The government engages in a technology policy ?
A. by allocating tradable technology permits to high technology industry.
B. to internalize the positive externality associated with technology-enhancing industries.
C. to help stimulate private solution to the technology externality
D. to internalize the negative externality associated with industrial pollution
A positive externality (that has not been internalized) caused the ?
A. equilibrium quantity to exceed the optimal quantity
B. equilibrium quantity to equal the optimal quantity
C. optimal quantity to exceed the equilibrium quantity
D. equilibrium quantity to be either above or below the optimal quantity
When wealthy alumni provide charitable contributions to their universities to reduce the tuition payments of current students it is an example of ?
A. an attempt to internalize a positive externality
B. an attempt to internalize a negative externality
C. a Pigouvian tax
D. a command-and-control policy
