Chapter 10 microeconomics test

A rain barrel is a container that captures and stores rainwater for landscape and garden use during dry periods. As a result, rain barrels benefit the community through water conservation. If homeowners do not consider this external benefit of rain barrels, then

A rain barrel is a container that captures and stores rainwater for landscape and garden use during dry periods. Rain barrels provide an external benefit to the community through water conservation. What can the government do to equate the equilibrium quantity of rain barrels and the socially optimal quantity of rain barrels?

A rain barrel is a container that captures and stores rainwater for landscape and garden use during dry periods. Rain barrels provide an external benefit to the community through water conservation. What can the government do to equate the equilibrium quantity of rain barrels and the socially optimal quantity of rain barrels?

Josiah installed a metal sculpture in his front yard. A negative externality arises if the sculpture

Josiah installed a metal sculpture in his front yard. A negative externality arises if the sculpture

​ Sophia sits behind Gabriel on an airplane. Gabriel owns the right to recline his seat and values this right at $10. Sophia values a non-reclined seat in front of her at $40. Assuming no transaction costs, which of the following represents an efficient solution?

The requirement that a minimum volume of ethanol is blended into the U.S. fuel supply is an example of

A benevolent social planner would prefer that the output of good x be decreased from its current level if, at the current level of output of good x,

A benevolent social planner would prefer that the output of good x be increased from its current level if, at the current level of output of good x,

A command-and-control policy is another term for a

A corrective tax

A cost imposed on someone who is neither the consumer nor the producer is called a

A dentist shares an office building with a radio station. The electrical current from the dentist's drill causes static in the radio broadcast, causing the radio station to lose $10,000 in profits. The radio station could put up a shield at a cost of $30,000; the dentist could buy a new drill that causes less interference for $6,000. Either would restore the radio station's lost profits. What is the economically efficient outcome?

A local manufacturing plant that emitted sulfur dioxide was forced to stop production because it did not comply with local clean air standards. This decision provides an example of

A negative externality

a patent is used to

A positive externality

Abe owns a dog; the dog's barking annoys Abe's neighbor, Jenny. Suppose that the benefit of owning the dog is worth $200 to Abe and that Jenny bears a cost of $400 from the barking. Assuming Abe has the legal right to keep the dog, a possible private solution to this problem is that

According to the Coase theorem, in the presence of externalities

According to the Coase theorem, private markets will solve externality problems and allocate resources efficiently as long as