Question

11. Which of the following is an example of a negative extemaliy A. A gold mine discharges arsenic into a natural lake B. A paper mill discharges raw chemical waste insto a river C. Excessive cutting of wood resources by logeing D. All of the above. 12. The Tragedy of the Commons occun A. a common resource is rival in consumption and nonescludable occurs because B. a common resource is underutilized C. crimes are committed in public places D. common resources are subject to exclusionary rules 13. A public good is a good that is sell to individual consumers. and thas is difficult for market producers to cludable and rival B, honexcludable and nonrival nonexcludable and rival D. excludable and nonrival 14. John loved to watch PBS television which was a public good He did not PBS, he would be referred to as a A. tax evader B. freeloader C. free rider D. all of the above than the marginal social costs imposed on 15. For a negative externality, the A. marginal private costs of an action are less B. marginal private costs of an action are more C. marginal private benefits of an action are more D. marginal social benefits of an action are more than the marginal social benefits 16. For a positive externality A. marginal private costs of an action are more B. marginal social costs of an action are more C. marginal private benefits of an action are less D. marginal private benefits of an action are more 17. The CRV of 5 or 10 cents for returning recyclable cans and botles works like A. an incentive to avoid littering. B. command-and-control regulation. C. a taxation program. D. all of the above. 18. A review website like Yelp is on the market to reduce A. the informational problem B. competition problem C. price problem. D. all of the above
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Answer 1

11. D) all of the above.

When action of one economic agent creates cost for the other then it is called negative externality. Paper mill creates cost for the fishery industry. Gold mine discharge also create cost for fishing industry.

12. a) a common resource is rival in consumption and nonexcludable.

Common Good is a good which is rival but non-excludable. For example: Fishes in sea. Sea is a good which is non-excludable property but fishes in the sea represents rivalnous.

13. B) nonexcludable and nonrival

Public good is a good which are non-rival and non-exclusive in nature. Non-rival means consumption of the public good by one person does not reduce its amount available for the other person. For example National defense, public park, street light etc. Non-exclusion means if public good has been provided then it does not possible to exclude one person from consuming it.

14. C) free rider.

Public good is a good which are non-rival and non-exclusive in nature. Non-rival means consumption of the public good by one person does not reduce its amount available for the other person. Non-exclusion means if public good has been provided then it does not possible to exclude one person from consuming it. In fact it will be Pareto inefficient to exclude one person because if that person is allowed to consume then he may be better off but other are not worse off. As a result of non-rival and non-exclusion, property there is problem of free rider and due to free rider market fails.

15. A) marginal private costs of an action are less

Negative externality creates more social cost and less marginal private cost because firm does not bear all its cost of production.

16. C) marginal private benefits of an action are less

Positive externality creates benefits for the others so private benefit is less than social benefit.