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Questions and Answers
What is an externality in a market transaction?
What is an externality in a market transaction?
- An effect of a market transaction that only impacts the buyer and seller
- An effect of a market transaction that impacts the government
- An effect of a market transaction that impacts the utility of those outside the transaction (correct)
- An effect of a market transaction that impacts the environment
Which of the following is an example of a negative externality?
Which of the following is an example of a negative externality?
- Improved living standards for workers
- Higher profits for companies
- Pollution caused by unregulated production decisions (correct)
- Increased employment opportunities
How do positive externalities benefit society as a whole?
How do positive externalities benefit society as a whole?
- By increasing the profits of the buyer and seller
- By reducing the cost of production for companies
- By providing additional benefits to those not involved in the transaction (correct)
- By improving the government's revenue
What is the impact of unregulated markets on the consideration of social and ecological damages?
What is the impact of unregulated markets on the consideration of social and ecological damages?
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How do trees planted by a landowner demonstrate a positive externality?
How do trees planted by a landowner demonstrate a positive externality?
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