A positive externality is an external benefit that accrues

QUESTION

A positive externality is an external benefit that accrues to the buyers in a market while a negative externality is an external cost that accrues to the sellers in a market. TrueFalseQuestion 2 (1 point)SaveIf a market generates a negative externality, the social cost curve is above the supply curve (private cost curve). TrueFalseQuestion 3 (1 point)SaveIf a market generates a positive externality, the social value curve is above the demand curve (private value curve). TrueFalseQuestion 4 (1 point)SaveA market that generates a negative externality that has not been internalized generates an equilibrium quantity that is less than the optimal quantity. TrueFalseQuestion 5 (1 point)SaveIf a market generates a negative externality, a corrective tax will move the market toward a more efficient outcome. TrueFalseQuestion 6 (1 point)SaveAccording to the Coase theorem, an externality always requires government intervention in order to internalize the externality. TrueFalseQuestion 7 (1 point)SaveTo reduce pollution by some targeted amount, it is most efficient if each firm that pollutes reduces its pollution by an equal amount. TrueFalseQuestion 8 (1 point)SaveWhen Smokey the Bear says, “Only you can prevent forest fires,” society is attempting to use moral codes and social sanctions to internalize the externality associated with using fire while camping. TrueFalseQuestion 9 (1 point)SaveA tax always makes a market less efficient. TrueFalseQuestion 10 (1 point)SaveIf Bob values smoking in a restaurant at $10 and Sue values clean air while she eats at $15, according to the Coase theorem, Bob will not smoke in the restaurant only if Sue owns the right to clean air. TrueFalseQuestion 11 (1 point)SaveIf transaction costs exceed the potential gains from an agreement between affected parties to an externality, there will be no private solution to the externality. TrueFalseQuestion 12 (1 point)SaveA corrective tax sets the price of pollution while tradable pollution permits set the quantity of pollution. TrueFalseQuestion 13 (1 point)SaveAn advantage of using tradable pollution permits to reduce pollution is that the regulator need not know anything about the demand for pollution rights. TrueFalseQuestion 14 (1 point)SaveThe majority of economists do not like the idea of putting a price on polluting the environment. TrueFalseQuestion 15 (1 point)SaveFor any given demand curve for pollution, a regulator can achieve the same level of pollution with either a corrective tax or by allocating tradable pollution permits. TrueFalse

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