1.Jennifer is aserious student who works on schoolwork each evening. She has aroommate who likes to party and frequentlyhosts noisy get-togethersin theirshared apartment without warning. Which of the following might be a likely outcome of this living situation?

a. Jennifer will experience negative externalities.

b. Jennifer will experience positiveexternalities.

c. Jennifer's roommate will experience positive externalities from living with Jennifer.

d. This scenario has nothing to do with externalities.

2.When a market successfully understands a negative externality like pollution, and assigns costs in a way that theyare reflected in the market price, the marketis said to be.

a. avoidingexternalities

b. allocatingresources efficiently

c. remainingoutside the transaction

d. incurringcosts outside the production process

3.An approach to environmental regulation which specifies allowable quantities of pollution and/or details which pollution-control technologies must be used is called a?

a. command-and-control regulation

b. integration regulation

c. market driven regulation

d. private regulation

4.Command-and-control regulations can be very effective in specific, targeted situations, but they have three shortcomings. Which of the following is not a shortcoming of command-and-control regulations?

a. they provide no incentive for going beyond the limits they set

b. they often have politically-motivated loopholes

c. they offer great flexibility on how to reduce pollution

d. they offer limited flexibility on where and how to reduce pollution

5.Which of the following situations areexamples of anegative externality?

Select thetwocorrect answers below.

a. a neighbor paints hishouse and it drips on your car

b. you discover that the clerk at the grocery store chargedyou too much after you already threw the receipt out

c. the city you live in closes a major highway for one month for construction which increases traffic on other routes and routinely makes you late for work

d. a friend brings you a cup of coffee that you weren't expecting to receive