IAL Economics Chapter 15

What are consumption externalities?

• When the social costs of consumption are different from the private costs of consumption

• When the social benefits of consumption are different from the private benefits of consumption

• When the social costs of production are different from the private costs of production

• When the social benefits of production are different from the private benefits of production

What is an externality or spillover effect?

• The difference between social costs and benefits and private costs and benefits

• The difference between social benefits and private benefits

• The difference between social costs and private costs

• The difference between social benefits and private costs

What does marginal analysis focus on?

• Large changes in an economic variable such as cost or output

• Steady-state changes in an economic variable such as cost or output

• Incremental changes in an economic variable such as cost or output

• Fluctuating changes in an economic variable such as cost or output

What are marginal social and private costs and benefits?

• The social and private costs and benefits of the first unit either produced or consumed

• The social and private costs and benefits of the last unit either produced or consumed

• The social and private costs and benefits of all units produced or consumed

• The social and private costs and benefits of the average unit produced or consumed

What are negative consumption externalities?

• When social benefits are less than private benefits

• When social costs are less than private costs

• When social benefits are greater than private benefits

• When social costs are greater than private costs

What is a negative externality or external cost?

• When net social cost is greater than net private cost

• When net social cost is less than net private cost

• When net social benefit is greater than net private benefit

• When net social benefit is less than net private benefit

What are negative production externalities?

• When social benefits exceed private benefits

• When social costs exceed private costs

• When social benefits are less than private benefits

• When social costs are less than private costs

What are positive consumption externalities?

• When social benefits are less than private benefits

• When social costs are less than private costs

• When social benefits exceed private benefits

• When social costs exceed private costs

What is a positive externality or external benefit?

• When net social cost is greater than net private cost

• When net social cost is less than net private cost

• When net social benefit is greater than net private benefit

• When net social benefit is less than net private benefit

What are positive production externalities?

• When social benefits exceed private benefits

• When social costs exceed private costs

• When social benefits are less than private benefits

• When social costs are less than private costs