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9 Cards in this Set
- Front
- Back
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The term Market Failure refers to
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a market that fails to allocate resources efficiently
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What does an externality result in?
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an equilibrium that does not maximize the total benefits to society
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Why is Dioxin emission that results from the production of paper a good example of a negative externality?
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self-interested paper producers will not consider the full cost of the dioxin pollution they
create |
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If an aluminum manufacturer does not bear the entire cost of the smoke it emits, it will
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emit a higher level of smoke than is socially efficient
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What does research into new technologies provide?
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positive externality, and too few resources are devoted to research as a result
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If a sawmill creates too much noise for local residents,
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the government can raise economic well-being through noise-control regulations
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This graph represents the tobacco industry. Without any government intervention, the equilibrium price and quantity are
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$1.60 and 42 units, respectively
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Suppose that the production of plastic creates a social cost which is depicted in the graph above. What is the socially optimal quantity of plastic?
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500 units
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The difference between the social cost curve and the supply curve reflects the
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cost of spillover effects from the concert (e.g., noise and traffic)
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