ECON 213 InQuizitive ch. 7 Liberty University Solution

What is the definition of an externality?

any benefit associated with a market activity

influence on market activity by an outside party

any cost associated with a market activity

a cost or benefit of market activity to an outside party

What is a main problem with determining the social benefits of a public good like a community fireworks show?

Fill in the blanks to complete the statement about how people treat property.

When a good belongs to –, it tends to –. That is the problem – exist to solve. A good belonging to – tends to be handled –.

Fill in the blanks to complete the description of public goods.

Public goods such as – are a form of –. Private markets tend to – these goods and services because of the – problem. As a result, – use people’s – dollars to provide for public goods.

Based on the role of property rights, in which of the following scenarios would individuals be incentivized to solve or ignore the problem?

Sports fans celebrate a victory by spraying foam on cars in the parking lot, including their own.

A homeowner spills tomato sauce on the carpet.

People throw trash out the window while driving.

Students leave trash on cafeteria tables after lunchtime.

A dog walker does not clean up after his dog on a neighborhood trail.

All externalities are market failures, but not all market failures are externaliti

Imagine that a politician has been asked to support the public good proposals below. In order not to waste money and improve her chances of reelection, she makes her decisions based on a cost-benefit analysis. In each of the situations, should she support or reject the proposal?

repairing a broken dam that is a major source of hydroelectric power for a large city

fixing a pothole along a lightly used street

installing streetlights in a community where there has been a lot of crime

building a flood control system for an area that floods once every 100 years

Which of the following correctly describes a subsidy?

Place the events leading to deforestation in Haiti in chronological sequence.

Which incentives come with owning private property?

the incentive to maintain the condition of the property

the incentive to conserve the property

the incentive to trade the property for something more valuable to the owner in the market

the incentive to protect property

the incentive to share the property with others

the incentive to use the property in a manner that is optimal for society

What are ways the government can prompt a producer to internalize pollution costs that were previously external?

Strictly from an economist’s perspective, which of the following is not a problem with cap-and-trade policy?

Why does a campground at a national park not necessarily count as a public good?

The number of camping spaces may be limited.

The park is government-owned.

The campground competes with private campgrounds.

The park may charge a fee for overnight camping.

Public schools are a typical example of a public good.

The members of a neighborhood community have been having a problem with mosquitoes. Although people have been complaining, only a few residents have had their lawns professionally sprayed for mosquitoes.