Understanding Externalities and Market Dynamics

What is an example of a positive externality mentioned in the video?

• Trash left on the beach

• Pollution from the paper factory

• The hotel blocking sunlight

• The smell of freshly roasted coffee

What was the main environmental issue caused by the paper factory?

• Blocking sunlight

• Raising fish prices

• Increasing tourism

• Polluting the river

How did the fishermen respond to the pollution caused by the paper factory?

• They moved to another lake

• They started using disposable cups

• They staged public protests

• They built a new factory

What happens to the supply curve when a factory internalizes the social costs of its production?

• It shifts to the right

• It becomes a straight line

• It remains unchanged

• It shifts to the left

Which of the following is NOT a suggested solution to combat negative externalities?

• Increasing production

• Regulation and fines

• Assigning property rights

• Creating public awareness