ECON 110 ZIRLOTT FINAL NEWEST ACTUAL EXAM WITH
COMPLETE QUESTIONS & ANSWERS/ VERIFIED/GRADED A+/
tradable pollution permits system
reduces pollution at lower cost than regulation
private solutions to externalities
-moral codes and social sanctions, e.g. the "Golden Rule"
-charities, e.g. the Sierra Club
-contracts between market participants and the affected
bystanders
-the coase thereom
Coase Theorem
if private parties can costlessly bargain over the allocation of
resources, they can solve the externalities problem on their
own
excludable
a person CAN be prevented from using it
Page 1 of 24
,transaction costs, stubbornness, and coordination problems
why do private solutions not always work? (3)
starbucks, wireless internet access, your UA education
excludable
not excludable
a person CANNOT be prevented from using it
FM radio signals, national defense
not excludable examples (2)
rival
if one person's use diminishes others' use
starbucks, tacos, apple iPad
rival examples (3)
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, not rival
one person's use has no effect on others' use
Positive
what type of externalities are these?
-being vaccinated against contagious diseases protects not
only you, but people who sit next to you in class
-vaccinating your pets
-R&D creates knowledge others can use
-people going to college raise the population's education level,
which reduces crime and improves government
smaller
In positive externality, Market Quantity is __________ than
socially desirable
externality
the uncompensated impact of one person's actions on the
well-being of a bystander (fancy term for side effect)
Negative
what type of externalities are these?
Page 3 of 24
COMPLETE QUESTIONS & ANSWERS/ VERIFIED/GRADED A+/
tradable pollution permits system
reduces pollution at lower cost than regulation
private solutions to externalities
-moral codes and social sanctions, e.g. the "Golden Rule"
-charities, e.g. the Sierra Club
-contracts between market participants and the affected
bystanders
-the coase thereom
Coase Theorem
if private parties can costlessly bargain over the allocation of
resources, they can solve the externalities problem on their
own
excludable
a person CAN be prevented from using it
Page 1 of 24
,transaction costs, stubbornness, and coordination problems
why do private solutions not always work? (3)
starbucks, wireless internet access, your UA education
excludable
not excludable
a person CANNOT be prevented from using it
FM radio signals, national defense
not excludable examples (2)
rival
if one person's use diminishes others' use
starbucks, tacos, apple iPad
rival examples (3)
Page 2 of 24
, not rival
one person's use has no effect on others' use
Positive
what type of externalities are these?
-being vaccinated against contagious diseases protects not
only you, but people who sit next to you in class
-vaccinating your pets
-R&D creates knowledge others can use
-people going to college raise the population's education level,
which reduces crime and improves government
smaller
In positive externality, Market Quantity is __________ than
socially desirable
externality
the uncompensated impact of one person's actions on the
well-being of a bystander (fancy term for side effect)
Negative
what type of externalities are these?
Page 3 of 24
