Externalities
Goods
Imperfect Competition
Inequality
100
What would be an appropriate government intervention to remove deadweight loss from a market with an externality?
Per-unit tax/subsidy
100
What characteristics of a private good does this car have? Bonus: what car is this?
Excludable and rivalrous
100
Why is imperfect competition considered a market failure?
Not allocatively efficient (D ≠ MC)
100
Since 2011, the top 0.1% of households have had more wealth than the bottom 90%. What is one intervention the US government could implement to increase equality?
Progressive tax/ transfer payments
200
What type of externality is depicted here?
Negative production
200
This lighthouse is always on, marking an area of sharp underwater rocks. What characteristics of a public good does it have?
Nonexcludable and nonrivalrous
200
Governments often use price ceilings coupled with lump sum subsidies to regulate natural monopolies.
What would be a better way to regulate monopolies that are not natural monopolies?
Antitrust laws
200
What type of tax is depicted here?
Progressive
300
Identify two market failures occurring in this market:
The firm is a monopoly, and there is a negative externality
300
Why are public goods not adequately provided by the free market?
Free riders
300
The market graph below depicts an industry controlled by a natural monopoly. What would be a fair return price ceiling?
PG
300
How would you calculate the Gini coefficient for income inequality in this society?
A/(A+B)
400
What area represents the deadweight loss if this market is unregulated?
WYX
400
What is the socially optimal quantity?
Q*
400
If unregulated, what price would this natural monopoly charge?
b
400
Bosnia has a Gini coefficient of 0.33, while Belarus has a Gini coefficient of 0.24. Which country has more equality?
Belarus
500
What is the dollar value of the per-unit tax or subsidy that should be placed on the good whose market graph is depicted below?
$12 subsidy
500
A majority of fish populations in the world are overexploited or collapsed. What type of market failure could have caused this?
Tragedy of the commons
500
What would be the socially optimal price ceiling for this natural monopoly?
$3.50
500
The figure below shows the distribution of livestock among Maasai households in different regions of Kenya and Tanzania. Which region has the most unequal distribution of livestock?
Simanjiro