Please provide justifications for all questions

1.An externality occurs when .

a. People consume a product outdoors

b. Trade occurs external to the market

c. Consumption or production of a product imposes a cost or benefit on a group other than consumers or producers

d. The price of one product influences demand for another product.

e. Government regulation impacts the market for a product.

2.If there is an external cost associated with the production of a good, the markets will under-estimate the ____________, and as a result the quantity produced will be _________ than the socially optimal quantity.

a.Cost; lower

b.Cost; higher

c.Benefit; lower

d.Benefit; higher

3.Coase Theorem says that private markets can efficiently provide goods even in the presence of externalities as long as property rights are well-defined and transaction costs are low.Determine whether each of the following externality problems can be solved without government intervention.

a.Your roommate plays loud music that keeps you awake at night.

b.Noise from traffic near your apartment keeps you awake at night.

c.Your neighbor's trash blows onto your lawn.

d.Smoke from a nearby factory might be making you sick

4.Which of the following is true about the social cost of a product with a negative externality?

a.Social Cost = External Cost - Private Cost

b.Social Cost = Private Cost + External Cost

c.Social Cost = Private Cost

d.Social Cost = Private Cost - External Cost

e.Social Cost = External Cost