FALL/SPRING/SUMMER
PCM
ECON 2302 MICROECONOMICS
Chapter 15
Below you will find the learning objective, concept, idea, term,
or theory that each question on the exam will cover. The numbers in the list
refer to the question number on Exam 4 that will test your knowledge of that
specific learning objective. You will also find a reference to the page
numbers in the textbook, Microeconomics, Explore & Apply: Activebook
Version 2.0 where the substance of each
question is explained. A much better understanding can often be attained by
working through the "active graphs" and "smart graphs"
connected to many of these objectives in the online material.
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After reading this chapter, you should be able to:
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Explain what a negative externality is.
Pages 236-239.
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Explain what a positive externality is. Pages 236-239.
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Use a graph to illustrate that the free market outcome when negative externalities
are present is different from the efficient outcome. Page 237.
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Use a graph to illustrate that the free market outcome when positive externalities
are present is different from the efficient outcome. Pages 237-238.
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Explain the importance of property rights and the Coase theorem when markets are missing and
externalities exist. Pages 239-240.
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Explain the incentives to conserve when common property is present. Pages 240-241.
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Discuss the benefits and drawbacks to using moral suasion and mandates to solve
problems created by externalities.
Pages 241-242.
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Describe the benefits and drawbacks of using pollution taxes and user fees to solve
the problems created by pollution. Pages 242-243.
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Explain the benefits and problems of using marketable permits to solve the problems
of pollution. Pages 243-245.
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Identify the major issues in transborder pollution and caring for the global environment.
Pages 245-248.
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