What is an externality?

Understanding Externalities Quiz

Quiz
•
Social Studies
•
11th Grade
•
Easy
Cavin Dennis Tito Siregar
Used 3+ times
FREE Resource
20 questions
Show all answers
1.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
A cost or benefit that affects only the producer
A cost or benefit incurred by a third party due to an economic transaction
A payment made by the government to firms
The price of goods in a competitive market
2.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
Which of the following is an example of a negative externality?
Improved public health from vaccinations
Air pollution caused by a factory
Increased property value due to a new park
Profits earned by a private business
3.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
What is a positive externality?
A benefit enjoyed exclusively by producers
A benefit that spills over to third parties
An unintended cost imposed on society
A surplus in government revenue
4.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
Which of these is NOT a characteristic of externalities?
They are not reflected in market prices
They only involve private costs and benefits
They can be positive or negative
They lead to market failure
5.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
What happens when negative externalities are not addressed?
The market produces the socially optimal quantity
The market produces more than the socially optimal quantity
Producers incur higher private costs
Consumers experience only positive benefits
6.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
What is an example of a positive externality in education?
Lower tuition fees for students
Increased earnings for graduates
A more educated workforce that benefits society
Higher profits for private schools
7.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
How can governments address negative externalities?
By providing subsidies
By imposing taxes
By reducing market demand
By eliminating competition
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