Government can correct the ______ of resources by subsidizing consumers of the product.

the production of goods is not at socially-optimal levels.

buyers and sellers cannot get together.

buyers and sellers get together but cannot settle on an equilibrium price.

buyers and sellers settle on an equilibrium price, but not on the amount to be exchanged at that price.

governments intervene to affect the outcome of a private market.

can be remedied either privately or through government intervention.

can be remedied only through private market arrangements.

are slowly eliminated through technological progress.

can be created only by government intervention.

cannot be corrected and must be accepted as a cost of having a market economy in an imperfect world.

are addressed with varying degrees of success by government intervention.

are not subject to government policies as in most other nations, but only

have never been successfully remedied by governments, despite numerous

are routinely corrected by government policy intervention.

are caused when governments, for various reasons, force markets from socially-optimal positions.

they may have their progress offset by the negative side-effects of levying the necessary taxes.

they nearly always succeed at this routine task.

they nearly always succeed if they can raise sufficient tax revenue to fund the

they have little chance of success and usually must turn the problem back over to the private sector.

imposes involuntary economic costs or benefits on others.

is supported by government transfers or subsidies.

is performed by the joint cooperation of private consumers or producers.

involves our exporting and importing.

occurs without opportunity costs to it.

the coal that must be consumed to do so.

its emission of smoke that imposes clean-up costs on people who do not buy its

not being able to produce other things with the same resources that go into

paying for the transmission of the electricity away from the generating plant.

the lost profits from having its selling price set by a public utility commission.

those above and beyond internal and external costs and benefits.

internal plus external costs and benefits.

internal minus external costs and benefits.

external minus internal costs and benefits.

internal divided by external costs and benefits.

marginal external costs and benefits be equalized.

marginal social costs and benefits be equalized.

marginal internal costs and benefits be equalized.

the marginal social benefits reach zero.

the marginal social costs reach zero.

an upward shift of their horizontal price line.

a social marginal cost curve lying above the private marginal cost curve.

a downward shift of their horizontal price line.

an upward shift of private marginal cost.

a downward shift of private marginal costs.

the vertical distance up to the social marginal cost curve.

horizontal distance between the social and private marginal cost curves.

vertical distance between the social and private marginal cost curves.

the vertical distance up to the private marginal cost curve.

the vertical distance between the social marginal cost curve and the horizontal price line.

too little electricity and too much pollution.

too little electricity but the optimum amount of pollution.

too much electricity and too much pollution.

the optimum amount of electricity but too much pollution in doing it.

too much electricity but the optimum amount of pollution.

social marginal benefit equals social marginal cost.

social marginal cost equals zero.

private marginal cost equals zero.

social marginal benefit equals private marginal cost.

social marginal cost equals private marginal cost.

remains constant but comes from less electric generation.

is reduced but remains positive.

remains constant but comes from more electric generation.

increases, but only because more electricity is generated, with less pollution

1,100 units per period.

gain, $15,000 per period

lose, $15,000 per period

gain, $40,000 per period

lose, $40,000 per period

lose, $8,000 per period

lose, $15,000 per period

lose, $1,500 per period

the social marginal benefit curve lies above her private marginal benefit curve.

the social marginal cost curve lies below her private marginal cost curve.

the social marginal cost curve lies above her private marginal cost curve.

the social marginal benefit curve lies below her private marginal benefit curve.

internalizing the externality.

reciprocating the externality.

entitling the externality.

the number of affected parties grows.

the number of affected parties shrinks.

the financial size of the producer is smaller.

the producer initiates a class-action suit.

the courts have ruled on the assignment of property rights.

irrational, separately "bribe" the producer of an externality

rational, avoid the cost of contributing to the common group benefit

irrational, avoid the cost of contributing to the common group benefit

rational, persuade the group to appeal to the government for help

rational, separately "bribe" the producer of an externality

hold out for a low price, luring you into buying a lemon

be willing to pay a higher price, allowing you to shift some of the risk to him

hold out for a low price, allowing you to shift some of the risk to him

be willing to pay a higher price, luring you into buying a lemon

cordless telephones, compensating for uniform quality

cordless telephones, conveying their relative quality

cane sugar, compensating for uniform quality

cane sugar, lowering the price to the consumer

cane sugar, getting bulk shipments to large purchasers more promptly

has uniform quality and a uniform price.

is available at various qualities and prices.

is not being advertised.

is rare and difficult to find.

is highly standardized.

old department store downtown, lowers the marginal cost of searching

giant suburban shopping mall, raises the marginal benefit of searching

giant suburban shopping mall, lowers the marginal cost of searching

old department store downtown, raises the marginal benefit of searching

falling marginal benefit, she has visited every store that sells calculators

rising marginal benefit, she has visited every store that sells calculators

rising marginal cost, her trip to the next store has an opportunity cost

falling marginal benefit, her trip to the next store has an opportunity cost exceeding $5

low, high number of sales

high, high number of sales

high, high revenue per sale

low, low revenue per sale

raise, advertising is very costly

lower, advertising is very costly

lower, it lowers the cost of consumer search

raise, it lowers the cost of consumer search

lower, it raises the cost of consumer search

information about a product has no influence on its market.

no information about a product is known to anyone.

all information about a product is known to all.

all information about a product is known to one party of a trade, and none to

more information about a product is known to one party of a trade than the

asymmetric, even numbers of lemons and cream puffs

symmetric, cream puffs

asymmetric, cream puffs

increases, retains some of the risk of her behavior

reduces, obtains two insurance policies that together totally eliminate risk

reduces, shifts all of her risk to the insurer

increases, shifts all of his risk to the insurer

reduces, retains some of the risk of his behavior

not want her, would have to pay large premiums to obtain insurance

want her, can be charged at the high end of the premium schedule

want her, will not be susceptible to the moral hazard problem

not want her, has relatively little chance of needing medical attention

want her, helps absorb the losses from insuring high-risk individuals

assigning the air rights to the parties affected by pollution completely

assigning the air rights to the polluter will result in no reduction of pollution, output.

assigning the air rights to the parties affected by pollution will result in no

the air rights can be assigned to either party in order to achieve the same

the vertical gap between the social marginal cost curve and the horizontal price

the vertical gap between the social marginal cost curve and the horizontal price

the vertical gap between the social and private marginal cost curves at the

the vertical gap between the social and private marginal cost curves at the

the horizontal gap between social and private marginal cost curves at the regulated price.

social marginal cost curve down.

horizontal price line down.

horizontal price line up.

private marginal cost curve up.

private marginal cost curve down.

the price line from P to P'.

the effective private marginal cost curve from C2 to C1.

the effective private marginal cost curve from C1 to C3.

the price line from P' to P.

private arrangements bring us to either point H or point G, where pollution has been eliminated.

government policies alone can lower output from Q2 to Q1.

private arrangements alone can lower output from Q2 to Q1.

private arrangements bring us to either point A or point D, both at the same price of electricity.

private arrangements bring us to either point A or point B, both at socially-optimal output level Q1.

is a complicated matter that usually drives governments to settle on shortcut policy methods.

is highly effective, since the Coase Theorem states that any tax rate chosen has the same effect on changing output.

is a simple matter, once marginal cost data has been collected from the polluter.

is simply a matter of finding out from the public how much of a per-unit subsidy they would be willing to pay the polluter, and doubling that to derive the optimal tax rate.

by direct regulation of the quantity of pollution

by a per-unit tax on output production

by giving property rights to the affected private citizens to get them to charge damages to the polluter

by giving property rights to the polluter and having them collect subsidies to reduce pollution

rivalrous and excludable

rivalrous and nonexcludable.

nonrivalrous and nonexcludable.

nonrivalrous and excludable.

where one person's consumption does not prevent or reduce any other's.

that no one can be prevented from or charged for using.

with a quantity demanded of zero at the current price.

with a quantity demanded of zero at a zero price.

with no close substitutes.

that no one can be prevented from or charged for using.

where one person's consumption does not prevent or reduce any other's.

with perfect substitutes available.

that is normally consumed jointly with others, such as salt.

produced in perfectly competitive markets.

The supply curve is horizontal.

The marginal benefit curves of individuals are summed vertically to derive total demand.

The marginal benefit curves of individuals are downward-sloping.

The marginal benefit curves of individuals are summed horizontally to derive total demand.

The supply curve is vertical.

The marginal benefit curves of individuals are summed vertically to derive total demand.

The supply curve is horizontal.

The marginal benefit curves of individuals are downward-sloping.

The marginal benefit curves of individuals are summed horizontally to derive total demand.

to person 1 less than the marginal cost of its provision, so at G2 the good is being over provided.

to person 2 equal to the marginal cost of provision, so at G2 the good is being efficiently provided.

to persons 1 and 2 jointly greater than the marginal cost of its provision, so at G2 the good is being over provided.

to persons 1 and 2 jointly greater than the marginal cost of its provision, so at G2 the good is being under provided.

pure rivalrousness at all times.

fluctuations in their degree of nonexcludableness.

fluctuations in their degree of nonrivalrousness.

pure excludability at all times.

appearances and disappearances from the market.

rivalrousness and excludeableness.

nonrivalrousness and nonexcludableness.

nonrivalrousness and excludableness.

rivalrousness and nonexcludableness.

It is impossible to exclude nontaxpayers from the receipt of the public good.

All benefits associated with the production and use of a public good are received by the government.

The availability of a public good to one person simultaneously makes it available to all members of society.

The private sector does not have an economic incentive to produce a socially optimal amount of a public good.

is derived in the same manner as demand curves for private goods.

is derived by horizontally summing all individual demand curves.

shows the total value that all individuals place on each unit of the good.

shows the total number of units that would be produced by the private sector at each possible price.

produced by the government.

subject to the free-rider problem.

the quantity demanded for a good or service is greater than the quantity supplied of the good or service.

the quantity supplied of a good or service is greater than the quantity demanded for a good or service.

demand and supply do not accurately reflect all the benefits and all the costs of production.

the market system is unable to adapt to or to accommodate change.

There are not enough tickets available to concerts of extremely popular performers.

The price of medical care has risen dramatically as a result of the introduction of sophisticated equipment and techniques.

Polio shots and chest x-rays provide widespread benefits to the community as a whole as well as to the individuals who get them.

Extensive decreases in the prices of electronic equipment resulted in large numbers of bankruptcies in the computer industry.

levy taxes on manufacturing firms located in crowded urban areas.

auction off pollution rights to those willing to pay the most for them.

make the polluter pay all of the costs associated with the polluting activity.

require that private citizens rather than taxpayers pay for the harmful effects of pollution.

subsidized companies that installed "maximum achievable control technologies" by the year 2000.

limited the emissions of automobiles in major U.S. cities with air pollution problems.

set stricter limits on pollution contributing to ozone depletion.

created a market for pollution rights among firms in an area.

providing unemployment compensation insurance

sponsoring legislation to reduce pollution

licensing of medical doctors and surgeons

requiring car drivers to buy auto insurance

Coase theorem problem.

negative externality problem.

adverse selection problem.

a person in ill health who purchases disability insurance

a person who buys a product that contributes to pollution

a person who purchases home insurance and then is less careful

a person who lobbies for government intervention to settle a property rights dispute

a person in poor health who purchases life insurance

a person who is taxed on the purchase of a carton of cigarettes

a person who purchases auto insurance and then drives more recklessly

a person who receives a subsidy from the Federal government to insulate a home

owners of poor-quality cars have a strong incentive to sell their cars, while owners of high-quality used cars have more incentive to keep their cars.

owners of high-quality cars will have a strong incentive to sell their cars to obtain the higher prices, while owners of poor-quality cars will have more incentive to keep theirs.

most people prefer new cars, but the high prices for new cars force most of them to buy used cars.

government actions to pass "lemon" laws have reduced information on used cars.

produced at the optimal level.

associated only with goods and services provided by the government.

price would decrease and its output would increase.

output would increase but its price would remain constant.

price would increase and its output would decrease.

price would increase but its output would remain constant.

government should consider placing a special tax on producers.

government should consider prohibiting the production of the commodity.

supply curve for the product lies too far to the right to provide an efficient allocation of resources.

demand curve understantes the total benefit from the product and resources are underallocated to its production.

the private demand curve will overestimate the true demand curve.

the private demand curve will underestimate the true demand curve.

consumers will be willing to pay for all these benefits in private markets.

the market demand curve will be the vertical summation of the individual demand costs.

resources are underallocated to the industry.

resources are overallocated to the industry.

the firms in this industry aren't maximizing profits.

at the market price, quantity demanded is less than quantity supplied.

the owners themselves.

city government officials.

a zoning ordinance restricting high-rise buildings.

a government fine for the builder of the high-rise.

an asymmetric information problem.

the law of conservation of matter.

the tragedy of the commons.

the trading of pollution rights.

a moral hazard problem.

an adverse selection problem.

the tragedy of the commons.

the market for pollution.

create a moral hazard problem.

reduce a moral hazard problem.

create an adverse selection problem.

reduce an adverse selection problem.

Clean Air Act of 1990.

Superfund law of 1980.

provision of unemployment compensation insurance.

establishment of standards for weights and measures.

not produce the product without government intervention.

produce a socially optimal allocation of resources.

allocate too few resources to production of the product.

allocate too many resources to production of the product.

an increase in the value of land you own when a nearby development is completed

the costs paid by a company to build an automated factory

decreased property values in a neighborhood where several houses are burglarized

the higher price you pay when you buy a heavily advertised product

decrease negative externalities from production.

increase negative externalities from production.

increase positive externalities from production.

turn to the government to provide public goods.

consumers to overconsume scare resources that are in limited supply.

government to overregulate common property resources.

private companies to use bribes and corruption of government officials to pollute the environment.

society to overuse common property resources to which no one holds property rights.

eliminate all pollution.

produce a shortage of pollution.

encourage potential polluters to increase emissions.

provide potential polluters with a monetary incentive to reduce emissions.

decreasing and the quantity increasing.

decreasing and the quantity decreasing.

increasing and the quantity increasing.

increasing and the quantity decreasing.

taxation of products that produce air pollution.

government subsidies to reduce emissions from factories.

direct controls in the form of uniform emission standards.

the internal and external trading of pollution rights in a market.

there is no pollution.

the marginal benefit of pollution control equals the marginal cost.

the total benefit of pollution control equals the total cost of pollution.

the average cost of cleaning up the pollution is greater than the marginal cost of cleanup.

the increased use of the market to sell products

the availability of transferable warranties for products

less information from the government

less information from sellers

individual bargaining.

negative externalities.

asymmetric information.

poorly defined property rights.