Question
5. A negative externality occurs when a. all the costs to society are not captured in the private supply curve. b. all the benefits to
5. A negative externality occurs when
a. all the costs to society are not captured in the private supply curve.
b. all the benefits to society are not captured in the private demand curve.
c. all the benefits to society are not captured in the private supply curve.
d. all the costs to society are not captured in the private demand curve.
7. Negative externalities tend to cause
a. overproduction of the good/service associated with it.
b. optimal production of the good/service associated with it.
c. firms producing the good/service associated with it to shutdown permanently.
d. underproduction of the good/service associated with it.
11. One reason it can be difficult to fund a public project such as a park with no entrance fee is
a. no one will pay for the park.
b. there will be so much competition from private companies who want to own the park.
c. the free rider problem.
d. only those who really value the park will pay for it.
12. When free markets do not allocate resources efficiently,
a. there is a government failure.
b. there is a market failure.
c. the government must intervene to correct for it.
d. there is really no problem because we never expect to allocate resources efficiently.
14. External benefits cause
a. the private demand curve to shift down towards the social demand curve.
b. the private demand curve to shift up towards the social demand curve.
c. the social demand curve to shift up towards the private demand curve.
d. the social supply curve to shift up towards the private supply curve.
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