3.1.5.4 and 4.1.8.4 Negative Externalities of Production

A negative externality is a cost that is suffered by a...

• Third party
• Second party
• First party
• All of the above

Externalities are also referred to as

• Both 1 and 2
• An external cost.
• Spill over effects
• Neither 1 nor 2

Externalities commonly occur in situations where...

• Both answers 1 and 2
• property rights are uncertain
• property rights have not been allocated
• Neither answer 1 nor answer 2

De Soto argued that successful market economies do not require property rights

• False
• True

What does p2 show?

• Social optimum price

• Free market price

What does curve D show?

• MPC

• MSC

• MPC=MSC

• Supply

What does curve E show?

• MSC

• MPC

• External cost

• MPC=MSC

What does curve C show?

• Answers 1, 2 and 3

• MPB

• MSB

• Demand

What does Q-Q1 show?

• Over production

• Over consumption

• Under production

• Under consumption

Where is the social optimum quantity?

• Q1

• Q

• Q2

• Q-Q1