Search
.Management Sciences
Category: Externality & Internality
Which of the following is not considered a transaction cost incurred by parties in the process of contracting to eliminate a pollution externality ?
A. costs incurred due to lawyers’ fees
B. costs incurred to reduce the pollution
C. costs incurred to enforce the agreement
D. costs incurred due to a large number of parties affected by the externality
E. All of these answers are considered transaction costs
Roberto and Thomas live in a university hall of residence Roberto values playing loud music at a value of €100. Thomas values Pease and quiet at a value of €150. Which of the following statements is true ?
A. It is efficient for Roberto to stop playing loud music regardless of who has the property right to the level of sound
B. it is efficient for Roberto to continue to play loud music
C. It is efficient for Roberto to stop playing loud music only if Thomas has the property right to peace and quiet
D. It is efficient for Roberto to stop playing loud music only if Roberto has the property right to play loud music
A pigovian tax on pollution ?
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.
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
Recent Comments