Week 9 - Externalities

Week 9 - Externalities

University

10 Qs

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Week 9 - Externalities

Week 9 - Externalities

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Nicky Zaikis

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10 questions

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1.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

Media Image

Refer to the image.  Given the position of the marginal social cost curve, one can conclude that the:

production of good X creates a negative externality
private cost of producing good X exceeds the social cost of production at all levels of output 
market quantity, Q3, is the socially optimal quantity
free market will produce too little of good X 

2.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

Which of the following best represents a positive externality? 

Purchasing a pass for an amusement park 
Being disturbed by neighboring construction noise 
Dumping waste on someone else’ s property 
Enjoying watching birds at a neighbor’s bird feeder 

3.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

Which of the following is true when there are negative externalities associated with the production of a good? 

The market will adjust automatically to equate marginal social costs and marginal social benefits. 
Marginal social costs will exceed marginal private costs unless businesses are forced to internalize the external costs. 
Marginal private costs will exceed marginal social costs, but the government can correct the problem. 
Producers should be subsidized so that they will produce more of the good. 

4.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

If the production of good X creates a positive externality, then from society’s perspective, the industry that produces good X tends to produce:

less than the socially optimal amount of good X 
greater than the socially optimal amount of good X 
the socially optimal amount of good X 
a shortage of good X, unless taxed 

5.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

Media Image

Which of the following is true based on the graph shown? 

Quantity of education in the private market is more than the socially optimal quantity 
Producers of education could be taxed in order to achieve the socially optimal quantity 
Consumption of education has a negative externality 
Consumers of education could be subsidized in order to achieve the socially optimal quantity 

6.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

If the production of a good generates a negative externality, which of the following is true at the private market equilibrium?

The private market equilibrium quantity is equal to the socially optimal quantity.

The marginal private cost is greater than the marginal social cost.

The price of the product equals the marginal social cost.

The private market equilibrium quantity is greater than the socially optimal quantity.

7.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

Media Image

Refer to the image. Given the position of the marginal social cost curve, one can conclude that

production of good X creates a negative externality.

private cost of producing good X exceeds the social cost of production at all levels of output.

market quantity, Q3, is the socially optimal quantity.

free market will produce too little of good X.

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