Chapter 9 Market Failure: Imperfect Information, External Benefits, and External Costs

| February 14, 2018

15)
It is efficient to reduce pollution to zero.

16)
It is efficient not to alter the amount of pollution produced by the market.

17)
It is efficient to reduce pollution up until the marginal benefit from reducing
the pollution equals the marginal cost of abatement.

18)
Pollution imposes costs on people and firms other than those involved in
producing or consuming the product that produces pollution.

19)
If the marginal costs of water pollution abatement is increased, then the
optimal amount of water pollution increases.

20)
Coase bargaining works best in a situation with a large number of affected
parties and the transactions costs of bargaining are relatively low.

21)
What is the economic rule for the optimal amount of pollution?

22)
Why does it usually NOT make sense to reduce pollution to zero?

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