1) Externalities essentially create A) non-excludability in consumption B) non-rivalry in consumption C) a divergence between private and social costs D) a free-rider problem 2) Which of the following is NOT true regarding externalities? A) Externalities have no effect on market efficiency. B) Externalities are imposed on agents other than the parties to an economic exchange. C) Externalities can be either positive or negative. D) Externalities can occur in either consumption or production. 3) Traffic congestion is an example of a A) positive externality B) negative externality C) pecuniary externality D) free-rider problem 4) The social cost of producing a good that generates negative externalities is the sum of the A) average variable cost and the average fixed cost of production B) average total cost and the marginal cost of production C) private cost and external costs of production D) total fixed cost and the total variable cost of production 5) When the production of a good generates negative externalities, A) the fixed cost of production is zero B) the variable cost of production is zero C) the private cost of production exceeds the social cost of production D) the social cost of production exceeds the private cost of production 6) When the production of a good involves negative externalities, the marginal social cost curve will most likely A) be parallel to the horizontal axis B) be parallel to the demand curve C) lie above the supply curve D) lie to the right of the supply curve 7) Private goods are. A) excludable but non-rival in consumption B) non-excludable and non-rival in consumption C) non-excludable but rival in consumption D) excludable and rival in consumption 8) If a good is excludable, A) one person's use of the good reduces the amount of the good available to others B) people can be prevented from using the good C) more than one person cannot use the good at the same time D) several people can use the good simultaneously 9) A good is non-rival in consumption if