10.Positive externalities lead markets to produce a. greater than efficient output levels and negative externalities lead markets to produce smaller than efficient output levels. b. smaller than efficient output levels and negative externalities lead markets to produce greater than efficient output levels. c. greater than efficient output levels and negative externalities lead markets to produce efficient output levels. d. efficient output levels and negative externalities lead markets to produce greater than efficient output levels. ____11.Fig. 3 in the notes above shows that education creates a positive externality. If we choose to not subsidize education with our taxes, a. the equilibrium quantity of education will be greater than the socially optimal quantity of education. b. the equilibrium quantity of education will be less than the socially optimal quantity of education. c. the equilibrium quantity of education will be equal to the socially optimal quantity of education. d. There is not enough information to answer the question. ____12.Economists thank that when markets fail to produce an efficient or fair outcome, the best solution is often a. shut-down of the market. b. no government intervention. c. externalizing the externalities. d. a market-based solution. ____13.Banning cfcs to reduce the size of the ozone hole is an example of a successful a. Coase-theorem solution. b. policy that reduces pollution by reallocating resources through market mechanisms. c. command-and-control policy to increase social efficiency. d. corrective tax. ____14.Most economists like market-based solutions instead of direct regulations to help solve pollution problems because: a. the market-based solution is less costly to society. b. the market-based solution can result in a greater reduction in pollution. c. the market-based solution raises revenue for the government. d. all of the above. ____15.Which of the following helped us solve the problem of acid raid by reducing sulfur dioxide emissions, a leading cause of acid rain? (i) corrective taxes (ii) tradable pollution permits (iii) amendments to the Clean Air Act a. (i) only b. both (i) and (ii) c. (iii) only d. both (ii) and (iii) ____16.One difference between tradable pollution permits and corrective taxes is a. Corrective taxes internalize the pollution externality while tradable pollution permits do not. b. With corrective taxes firms pay for pollution; with tradable pollution permits firms do not. c. With a corrective tax the government sets the price of pollution; with tradable pollution permits, government sets the quantity of pollution. d. Corrective taxes are a market-based solution while tradable pollution permits are a command-and-control policy. ____17.Which of the following are some of the private solutions to externalities? a. the Golden Rule and taxes. b. charities and subsidies. c. charities and the Golden Rule. d. taxes and subsidies. ____18.If property rights are well-established, and transaction costs are low, which theorem says people will solve the problem of externalities on their own? a. the Coase theorem. b. the Godwin's-Law theorem. c. the Pythagorean theorem. d. the Pigouvian theorem. ____19.Monte owns a dog; the dog's barking annoys Monte's neighbor, Teresa. Suppose that the benefit of owning the dog is worth $400 to Monte and that Teresa bears a cost of $600 from the barking. Assuming Monte has the legal right to keep the dog, a possible private solution to this problem is that a. Teresa pays Monte $500 to give the dog to his parents who live on an isolated farm. b. Monte pays Teresa $250 for her inconvenience. c. Teresa pays Monte $300 to give the dog to his parents who live on an isolated farm. d. There is no private transaction that would improve this situation