ENVR 210 CLICKER QUESTIONS Chapter 10 (Mankiw) – Clicker Question Set #2

Markets are often inefficient when negative externalities are present because 1. private costs exceed social costs at the private market solution. 2. externalities cannot be corrected without government regulation. 3. social costs exceed private costs at the private market solution. 4. production externalities lead to consumption externalities.

Which of the following would not be considered a negative externality? 1. Smelter, Inc. creates steel and pollution. 2. Your friend buys a new puppy that barks every night. 3. You have an adverse reaction to a medication your doctor prescribed for you. 4. None of the above.

The difference between a corrective tax and a tradable pollution permit is that 1. a corrective tax sets the price of pollution and a permit sets the quantity of pollution. 2. a corrective tax creates a more efficient outcome than a permit. 3. a corrective tax sets the quantity of pollution and a permit sets the price of pollution. 4. a permit creates a more efficient outcome than a corrective tax.