pProbSetChap17 - EC201: Spring 2010 Professor Steven Haider...

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EC201: Spring 2010 Professor Steven Haider Problem Set for Chaps 17 NOTE: An answer key follows each of the chapters. In the answer key, each question is assigned a “Topic”, which generally refers to a subtitle of the text. Thus, if you would like additional information about any of the questions, these topics will point you to where to look in the text. Version: 30-Mar-10
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Page 1 1. Suppose the production of DVDs generates sulfur dioxide, an air pollutant. Then the market price for DVDs: A) is less than the marginal cost to society of DVDs. B) is more than the marginal cost to society of DVDs. C) equals the marginal cost to society of DVDs. D) may be more than, less than, or equal to the marginal cost to society of DVDs. Use the following to answer questions 2-3: Figure: The Socially Optimal Quantity of Pollution 2. (Figure: The Socially Optimal Quantity of Pollution) In the figure, the optimal level of pollution is: A) zero, since no pollution is best for society. B) where the marginal social benefit curve intersects the quantity axis. C) where the marginal social cost curve intersects the quantity axis. D) where the marginal social benefit curve intersects the marginal social cost curve.
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pProbSetChap17 - EC201: Spring 2010 Professor Steven Haider...

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