BUSINESS

1.  If drivers decide to make phone calls without considering the costs imposed on others, the:
[removed] marginal social cost curve will lie below the marginal cost of production curve.
[removed] number of phone calls made while driving will be fewer than the socially optimal quantity.
[removed] number of phone calls made while driving will be more than the socially optimal quantity.
[removed] marginal social benefit curve will lie below the marginal social cost curve.
2.  Given the general agreement that pollution is undesirable and social welfare is increased by reducing pollution, the optimal level of pollution in a society is:
[removed] zero.
[removed] the level at which the marginal social cost is equal to the marginal social benefit.
[removed] the level that reduces the marginal social costs of pollution to zero.
[removed] the level that minimizes the average total cost of producing the product that generates the pollution.
3.  The efficient rate of emissions occurs when:
[removed] the marginal social benefits of pollution exceed the marginal social costs of pollution.
[removed] there is absolutely no damage done to a pristine environment.
[removed] government forbids all pollution no matter what the cost.
[removed] the change in social benefits and the change in social costs due to an additional unit of emissions are equal.
4.  According to the Coase theorem, when negative externalities are present, a market will:
[removed] always reach an efficient solution.
[removed] reach an efficient solution only if the negative externalities are offset by positive externalities.
[removed] reach an efficient solution if transaction costs are low and property rights are well-defined.
[removed] reach an efficient solution only if the government intervenes in the market.
5. 

Reference: Ref 16-2

(Table: Coal Mine Pollution) The table Coal Mine Pollution shows the marginal social benefit and cost of various amounts of pollution from a coal mine. The efficient quantity of pollution is _____ tons.

[removed] 8
[removed] 0
[removed] 4
[removed] 2
6. 

Reference: Ref 16-2

(Table: Coal Mine Pollution) The table Coal Mine Pollution shows the marginal social benefit and cost of various amounts of pollution from a coal mine. If 5 tons of pollution is produced:

[removed] too much pollution is produced.
[removed] the efficient amount of pollution is produced.
[removed] the socially optimum amount of pollution is produced.
[removed] not enough pollution is produced.
7.  Your community requires the sewage treatment plant to process raw sewage so that it is safe to return the water to the environment. This is:
[removed] an environmental standard.
[removed] an emissions tax.
[removed] a tradable emissions permit.
[removed] the Coase theorem.
8.  For the same amount of pollution emitted, an emissions tax is said to be more efficient than an environmental standard because all polluters:
[removed] emit pollution up to the point at which the marginal benefit of polluting is equal to the emissions tax.
[removed] emit the same amount of pollution, regardless of the marginal benefit of polluting.
[removed] pay the same total tax bill for their pollution.
[removed] reduce pollution emissions to zero.

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