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A competitive, unregulated market would:

a. Produce too much pollution because pollution is an external cost.

b. Produce too little education because education has an external benefit.

c. Fail to achieve equilibrium if there are externalities present.

d. Both answers A and B are correct.

e. Both answers B and C are correct.

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Sonia Dhawan
Sonia DhawanLv10
25 Oct 2020

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Related questions

1. In a competitive market, a free-market approach is always best when an external cost is present. True or false?

2. When externalities are present in a market, the social surplus is maximized. True or false?

3. The Clean Air Act of 1990:

a. established a tradable allowances program for sulfur dioxide.

b. is an application of the Coase theorem.

c. All of the answers are correct.

d. allows firms to profit by selling their unused pollution allowances

Ā 

Ā 

How would an economist likely respond to the statement There is no such thing as an acceptable level of pollution?

A. An economist would agree with this statement because western countries have sufficient monetary resources to invest in pollution-reducing equipment. Further, people can change their consumer choices to eliminate pollution.

B. An economist would disagree with this statement because although reducing pollution has benefits, doing so also has costs. The optimal level of pollution is where the marginal benefit of reducing pollution just equals the marginal cost.

C. An economist would disagree with this statement because the market is able to allocate sufficient resources to reducing pollution to an acceptable level. Externalities are taken into account by those making market choices.

D. An economist would agree with this statement because the word "acceptable" reflects individual preferences, which are not easily accounted for in a market with externalities such as pollution.

1Ā  John raises bees to pollinate his orchard, a couple of bees which escaped ended up pollinating his neighbour's orchard so:

a. john's neighbour has received an external cost of john's beekeeping.

b. john's neighbour has received an external benefit of john's beekeeping.

c.john's neighbour has received an internal cost of john's beekeeping.

d.none of the above.

2. external costs are:

a. borne by individuals other than those who incurred them.

b.borned by the public but incurred by the government.

c.another term for implicit costs.

d.borne by the government but incurred by the public.

3. the optimal quantity of ail pollution is:

a. found by setting the quantity of air pollution equal to the quantity of water pollution.

b.a meaningless concept since monetary values cannot be attached to problems associated with pollution.

c.whatever amount of pollution is produced by the profit-maximizing firm.

d. found by equating the marginal benefits from further reductions in pollution and the marginal costs of further reductions in pollution.

4. technological changes that make it easier to produce in a "cleaner" fashion would cause:

a. the marginal cost curve of pollution abatement to shift left increasing the degree of air quality.

b.the marginal benefit curve of pollution abatement to shift left increasing the degree of air quality.

c.the marginal cost curve of pollution abatement to shift right increasing the degree of air quality.

d.the marginal benefit curve of pollution to shit right increasing the degree of air quality.

5. if pollution is bad, why do we still use pollution-causing resources such as coal and oil to generate electricity?

a. the transaction cost of pollution is too low.

b.governements lack the political will to enforce the use of pollution-free resources.

c.pollution is only a private cost.

d.the cost of using pollution-free resources to generate power in many circumstances is much higher than generating the same power through conventional pollution causing means.

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