Micro 6.4 CW: Government and Market Failure, Public Goods and Environment (Agree/Disagree)

1. That government which has the smallest budget is the most efficient in the economic sense.

2. One determines a demand curve for a public good by summing horizontally the individual demand curves for the public good.

3. The optimal quantity of a public good occurs where the marginal benefit of the citizen who has the highest preference for the good just equals the good's marginal cost.

4. Benefit-cost analysis is frequently difficult to apply because it is difficult to measure the full benefits of a public good or service.

5. The principle that private negotiations can resolve potential externalities without resort to government intervention is known as the Coase Theorem.

6. Present law forbids all trade or sales of pollution rights.

7. Society's optimal amount of pollution abatement (elimination) is where society's marginal benefit of abatement is zero.

8. Improvement in the technology of pollution control is likely to increase society's optimal amount of pollution abatement.

9. Society's marginal cost of pollution abatement (elimination) curve slopes upward because of the law of diminishing marginal utility.

Sort the statements into agree/disagree categories. Be prepared for discussion on each one!

Sort the statements into agree/disagree categories. Be prepared for discussion on each one!