The Coase theorem to apply, all of the following

Question 12 pts

For the Coase theorem to apply, all of the following conditions must be satisfied EXCEPT

The basic rights of the individuals must be clearly understood.

There must be no impediments to bargaining.

Only a few people can be involved.

Liability rules must be established and enforced.

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Question 22 pts

If private bargaining to resolve an externality is to result in an efficient outcome,

rights must be protected by liability rules.

there must be tradable pollution rights.

there must be direct regulation of externalities.

the initial assignment of rights must be clear to both parties.

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Question 32 pts

In any case where there is a negative externality, it is better to form a government agency to solve the problem.

TRUE

FALSE

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Question 42 pts

According to the Coase theorem, bargaining will bring the contending parties to the correct solution only if the rights are initially assigned to the party causing the externality.

TRUE

FALSE

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Question 52 pts

For private goods, market demand is the ________ summation of individual demand curves and for public goods, market demand is the ________ summation of individual demand curves.

horizontal; vertical

vertical; horizontal

horizontal; horizontal

vertical; vertical

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Question 62 pts

If one person's enjoyment of the benefits of a good does not interfere with another's consumption of it, the good is

excludable.

nonexcludable.

rival in consumption.

nonrival in consumption.

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Question 72 pts

If, at a low cost, you cannot prevent a person from benefiting from the consumption of a good you produced, the good is

excludable.

nonexcludable.

rival in consumption.

nonrival in consumption.

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Question 82 pts

A national campaign is asking for contributions of $1.00 per citizen to fund the building of the September 11th memorial in New York City. The total cost of the memorial is estimated to be $260 million. You decide not to contribute, because your contribution would be small relative to the total that it won?t make any difference whether you contribute or not. This is an example of the ________ problem.

nonexcludable

nonrival in consumption

free-rider

drop-in-the-bucket

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Question 92 pts

Refer to the figure above. Suppose the government assigns property rights to the airlines. No negotiations occur between the parties. The resulting level of air travel is ________.

0 units

100 units

120 units

Indeterminate from the given information.

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Question 102 pts

Refer to the figure above. Suppose the government assigns property rights to the airlines. No negotiations occur between the parties. The marginal damage cost associated with the resulting level of air travel is ________.

$25

$120

$265

$385

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Question 112 pts

Refer to the figure above. Suppose the government assigns property rights to the airlines, then the airlines and the residents engage in negotiations. The resulting efficient level of air travel is ________.

0 units

100 units

120 units

Indeterminate from the given information.

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Question 122 pts

Refer to the figure above. The marginal damage cost associated with the efficient level of air travel is ________.

$0

$100

$225

$265

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Question 132 pts

Refer to the figure above. The marginal damage cost ________ as the quantity of air travel increases.

increases

decreases

remains constant

becomes negative

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Question 142 pts

Refer to the figure above. Suppose the government assigns property rights to the nearby residents affected by the airlines. No negotiations occur between the parties. The resulting level of air travel is ________.

0 units

100 units

120 units

Indeterminate from the given information.

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Question 1533 pts

Complete the table below by filling in ALL missing numbers. If your answer is a decimal rather than a whole number, round your answer to the nearest 1 decimal place (the nearest tenth). Also, do not enter leading zeroes.

For example, if the answer to a field is 1/8, enter .1

Do not enter .125 or 0.13 or 0.1

Consider the fictitious good Derp. The demand for Derp is Q = 1200 – 2P. Suppose the supply of Derp is given by Q = –600 +2P.

What is the equilibrium price of Derp?

What is the equilibrium quantity of Derp?

What is the price elasticity of demand at the equilibrium price and quantity?

What is the price elasticity of supply at the equilibrium price and quantity?

For the next seven questions, suppose a per-unit excise tax of $50 per Derp is levied on the consumers.

What price will sellers receive after the tax is levied?

What price will consumers pay after the tax is levied?

What percent of the tax will be paid by the consumers of Derp? (give an answer between 0 and 100)

What percent of the tax will be paid by the suppliers of Derp? (give an answer between 0 and 100)

How many Derps will be sold after the tax is imposed?

How much consumer surplus do consumers get after the tax?

What is the deadweight loss created by this tax?

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Question 1633 pts

Complete the table below by filling in ALL missing numbers. If your answer is a decimal rather than a whole number, round your answer to the nearest 1 decimal place (the nearest tenth). Also, do not enter leading zeroes.

For example, if the answer to a field is 1/8, enter .1

Do not enter .125 or 0.13 or 0.1

Consider the market for laptop computers. The demand for laptops is Q = 1800 – 3P. Suppose the supply of laptops is given by Q = –200 +2P.

What is the equilibrium price of laptops?

What is the equilibrium quantity of laptops?

What is the price elasticity of demand at the equilibrium price and quantity?

What is the price elasticity of supply at the equilibrium price and quantity?

For the next seven questions, suppose a per-unit excise tax of $80 per laptops is levied on the consumers.

What price will sellers receive after the tax is levied?

What price will consumers pay after the tax is levied?

What percent of the tax will be paid by the consumers of laptops? (give an answer between 0 and 100)

What percent of the tax will be paid by the suppliers of laptops? (give an answer between 0 and 100)

How many laptops will be sold after the tax is imposed?

How much consumer surplus do consumers get after the tax?

What is the deadweight loss created by this tax?

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Question 172 pts

A well-maintained house and yard is an example of

a positive externality.

a negative externality.

a public good.

logrolling.

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Question 182 pts

Assuming no externalities exist, if a good?s price is less than its marginal cost, then the benefits consumers derive are

greater than the cost of resources needed to produce it and less should be produced.

greater than the cost of resources needed to produce it and more should be produced.

less than the cost of resources needed to produce it and less should be produced.

less than the cost of resources needed to produce it and more should be produced.

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Question 192 pts

Vaccinations convey ________ to third parties.

positive externalities

negative externalities

economies of scale

public goods