Question

Which of the following statements is FALSE? A. When products that create positive externalities are produced,...

Which of the following statements is FALSE?

A. When products that create positive externalities are produced, at the market equilibrium output, the marginal social benefit generated by consuming the product exceeds the marginal private benefit. B. When there is a negative externality, the competitive equilibrium output is greater than the economically efficient output level. C. The marginal social benefit of a given level of production of a public good is the vertical sum of all marginal private benefits for that level of production. D. The Coase Theorem asserts that government intervention is a prerequisite for addressing externality problems.

Homework Answers

Answer #1

All the above statements are correct except D. D is the false one because the course theorem never asserts that government intervention is a prerequisite for addressing externality problems. The Coase theorem asserts that there are proficient competitive market, property rights are properly assigned and there are no Transaction Costs, then bargaining among parties associated with the Externalities may lead to an efficient outcome. Hence, this framework of Coase theorem never assert that Government intervention is a prerequisite for addressing externality problems rather it asserts that the parties may among themselves through private mechanism i.e, bargaining can solve the problem of externality.

Hence, Option D is correct.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
QUESTION 2 Government intervention that aims to promote technology-enhancing industries is called a. industrial technology assistance....
QUESTION 2 Government intervention that aims to promote technology-enhancing industries is called a. industrial technology assistance. b. intervention policy. c. assisted technology. d. industrial policy. 4 points    QUESTION 3 Which of the following statements is not correct? a. Government policies may improve the market's allocation of resources when negative externalities are present. b. Without government intervention, the market will tend to undersupply products that produce negative externalities. c. Government policies may improve the market's allocation of resources when positive...
The private equilibrium quantity is ____ the socially optimal quantity in the case of negative consumption...
The private equilibrium quantity is ____ the socially optimal quantity in the case of negative consumption externalities. From society's viewpoint it would be efficient for ____ of the product to be consumed. equal to; more less than; more greater than; less less than; less greater than; more In the case of negative production externalities, the marginal social cost is ____ the marginal private cost and producers will ____ the product in a free market. greater than; overproduce greater than; underproduce...
Question 10 (1 point) Which of the following statements is true? a Since social benefits are...
Question 10 (1 point) Which of the following statements is true? a Since social benefits are greater than the private benefits, the government must either aid the producer to encourage more output, or engage in its own production of the good with positive externalities. b Positive externalities occur when a third party is affected by the transaction in a negative way. c In a market with positive externalities, the good is “underproduced” because the producer is not bearing the full...
QUESTION 8 Education is heavily subsidized through public schools and government scholarships. This subsidization of education...
QUESTION 8 Education is heavily subsidized through public schools and government scholarships. This subsidization of education reflects the fact that a. the market-equilibrium quantity of education exceeds the optimal quantity of education. b. a negative externality requires a subsidy to move the market equilibrium closer to the social optimum. c. the social cost of education exceeds the private cost of education. d. the social value of education exceeds the private value of education. 4 points    QUESTION 9 When an...
Which of the following statements is FALSE? A. Private bargaining will lead to an efficient outcome...
Which of the following statements is FALSE? A. Private bargaining will lead to an efficient outcome in the case of externalities, regardless of transaction costs. B. Due to non-excludability of public goods, many people are unwilling to pay for their own consumption. C. An outcome is efficient when marginal social benefit equals marginal social cost. D. The external cost resulting from a negative externality can be reduced by imposing a Pigouvian tax. Reset Selection Question Suppose that the market for...
Paraphrase this please!! Don't use paraphrasing tool please!!!! Positive externalities lead to underproduction. Jon does not...
Paraphrase this please!! Don't use paraphrasing tool please!!!! Positive externalities lead to underproduction. Jon does not compensate Bob for the benefit of having pollinating bees nearby, so Bob produces less honey than is socially optimal. The tax on Bob’s production makes this distortion even worse by reducing production even further. Because the cost of deadweight loss increase at an increasing rate, this additional distortion is greater than if there had been no preexisting externality. In figure below, a tax on...
A competitive refining industry produces one unit of waste for each unit of refined product. The...
A competitive refining industry produces one unit of waste for each unit of refined product. The industry disposes of the waste by releasing it into the atmosphere. The marginal benefit for the refined product is given by MB = 24 - Q, where MB is the marginal benefit when quantity Q of the product is consumed. The inverse supply curve (also the marginal private cost curve) for refining is MPC = 2 + Q, where MPC is the marginal private...
A competitive refining industry produces one unit of waste for each unit of refined product. The...
A competitive refining industry produces one unit of waste for each unit of refined product. The industry disposes of the waste by releasing it into the atmosphere. The marginal benefit for the refined product is given by MB = 24 - Q, where MB is the marginal benefit when quantity Q of the product is consumed. The inverse supply curve (also the marginal private cost curve) for refining is MPC = 2 + Q, where MPC is the marginal private...
PART I- TRUE-FALSE QUESTIONS Following 15 questions are True-False Questions. Write ‘T’ for True and ‘F’...
PART I- TRUE-FALSE QUESTIONS Following 15 questions are True-False Questions. Write ‘T’ for True and ‘F’ for False in the True / False Answer Box. Each question carries ‘2’ mark. Excess capacity characterizes firms in monopolistically competitive markets, even in situations of long-run equilibrium. A competitive market will typically experience entry and exit until accounting profits are zero A monopolist produces an efficient quantity of output but it is still inefficient because it charges a price that exceeds marginal cost...
Question 7 (1 point) Which of the following statements is true? a Examples of public goods...
Question 7 (1 point) Which of the following statements is true? a Examples of public goods include national defense, public music concerts, and outdoor fireworks displays. b Quasi-public goods are those that have large positive externalities (or spillover benefits). That is, quasi-public goods not only benefit those who pay for it but also some third party external to the market transaction. c The government typically sponsors the provision of quasi-public goods. d All of the above. e Only a) and...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT