True or False:
1. Activities that impose costs on people other than the suppliers or demanders of a good or service are negative externalities.
2. In markets where negative externalities are created, the marginal social cost of production exceeds the marginal private cost of production.
3. In markets where negative externalities are created, the marginal private cost of production exceeds the marginal social cost of production.
4. The marginal social cost of production equals the marginal private cost of production plus the marginal external cost of production.
5. A poultry packing firm breeds, raises, and slaughters chickens for market. The firm’s chicken yards and processing plant emit foul odors into the air, which affects surrounding residential neighborhoods. If the poultry packing firm is a perfectly competitive firm producing at a level of output such that the price of a pound of chicken equals the firm’s marginal cost, it will produce a socially optimal quantity of chicken.
6. The nonpecuniary (or nonmonetary) costs associated with negative externalities are, in practice, very difficult to assess.
7. The goal of EPA compliance standards is to force companies to find less pollution-intensive ways of producing goods and services.
8. Available evidence suggests that since 1970, compliance standards have not succeeded in reducing U.S. pollution levels.
9. Compliance standards can create situations where the marginal cost of eliminating pollution exceeds the marginal benefit from doing so.