Externalities

The price you pay for an iTunes download

• Private costs

• External costs

• Private benefits

• External benefits

The benefit your neighbor receives from hearing you play your pleasant music

• Private costs

• External costs

• Private benefits

• External benefits

The annoyance of your neighbor because she doesn’t like your achingly conventional music

• Private costs

• External costs

• Private benefits

• External benefits

Driving a car on crowded highway produces

• a negative externality.

• a positive externality.

Apartment dwellers who buy fire alarms or fire extinguishers generate a

• negative externality.

• positive externality.

When social costs are greater than private costs, there is a;

• positive externality

• negative externality

• less than socially optimal output

• socially optimal output

In which of the following situations is market failure least likely to occur? A situation where;

• externalities exist

• many producers compete in the market

• there is a sole producer in market

• there is a very uneven distribution of income and wealth

Government regulations exist to

• Increase economic freedom
• Protect consumers from negative externalities
• Punish people who intervene in the free market
• Provide incentives to privatize

Who tries to prevent market failures due to negative externalities?

• The FBI

• Merchant Marines

• The Government

• Porch Pirates

_____ are situations when there's an external costs or external benefits that accrue to other people or society as a whole.

• Externalities

• Internalities

• Progressives