Econ 201, Douglas
Fall 2007
QUIZ 8
PLEDGE: I have neither given nor received unauthorized help on this quiz.
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1. Refer to Figure 10-7. Which graph illustrates a
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corrective, or Pigovian, tax?
a. the left graph
b. the right graph
c. both graphs
d. neither graph
The difference between a corrective (Pigovian)
tax and a tradable pollution permit is that
a. a corrective tax sets the price of pollution
and a permit sets the quantity of pollution.
b. a corrective tax creates a more efficient outcome than a permit.
c. a corrective tax sets the quantity of pollution and a permit sets the price of pollution.
d. a permit creates a more efficient outcome than a corrective tax.
Tradable pollution permits
a. have prices that are set by the government.
b. will be worth more to firms that can reduce pollution only at high cost.
c. are likely to create a higher level of total pollution.
d. are less effective than Pigovian taxes in reducing pollution.
Goods that are excludable include both
a. natural monopolies and public goods.
b. public goods and common resources.
c. common resources and private goods.
d. private goods and natural monopolies.
Goods that are rival in consumption include both
a. private goods and common resources.
b. natural monopolies and public goods.
c. common resources and public goods.
d. private goods and natural monopolies.
Which of the following goods is rival in consumption and excludable?
a. a slice of pizza
b. cable TV service
c. a sunset
d. national defense
The fish in the ocean are an example of a
a. common resource.
b. public good.
c. private good.
d. natural monopoly.
A common theme among examples of market failure (externalities, public goods, common resources) is
a. the good being provided harms society in some systematic way.
b. some item of value does not have an owner who is able to control access to it.
c. private markets will doubtless provide the goods more efficiently than government.
d. they are all caused by bad people.
Econ 201, Douglas
Fall 2007
Econ 201 Quiz 8
Answer Section
MULTIPLE CHOICE
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Analytical
Analytical
Analytical
Applicative
Applicative
Applicative
Applicative
Interpretive