Principles of Microeconomics: Externalities Quiz

<p>It results in underproduction or overproduction. (C)</p> Signup and view all the answers

<p>They are non-excludable and non-rivalrous. (D)</p> Signup and view all the answers

<p>Underproduction of beneficial goods. (D)</p> Signup and view all the answers

<p>The total cost to society including both private and external costs. (D)</p> Signup and view all the answers

<p>Welfare economics. (A)</p> Signup and view all the answers

<p>Brings the quantity closer to the social optimum. (B)</p> Signup and view all the answers

<p>It depends on large-scale negotiations. (A)</p> Signup and view all the answers

<p>Non-rival and non-excludable. (B)</p> Signup and view all the answers

<p>People receiving benefits without contributing. (C)</p> Signup and view all the answers

<p>Wide-reaching effects on large populations. (A)</p> Signup and view all the answers

<p>A factory's emissions harm the health of surrounding communities. (D)</p> Signup and view all the answers

<p>Non-excludable and rival. (B)</p> Signup and view all the answers

<p>It is non-rival and non-excludable. (A)</p> Signup and view all the answers

<p>Overuse and depletion of a common resource. (C)</p> Signup and view all the answers

<p>Fishing licenses and quotas. (D)</p> Signup and view all the answers

<p>They are rival but non-excludable. (B)</p> Signup and view all the answers

<p>They reduce the spread of disease, benefiting society. (D)</p> Signup and view all the answers

<p>Creating more public access points. (A)</p> Signup and view all the answers

<p>An open river for fishing by anyone. (A)</p> Signup and view all the answers

<p>They encourage individuals to act in their own self-interest. (A)</p> Signup and view all the answers

<p>To reduce pollution to a socially optimal level. (D)</p> Signup and view all the answers

<p>Government-issued allowances for a set amount of pollution that can be bought and sold. (B)</p> Signup and view all the answers

<p>They can disproportionately affect low-income households. (B)</p> Signup and view all the answers

<p>Well-defined property rights and low transaction costs. (D)</p> Signup and view all the answers

<p>Subsidies. (D)</p> Signup and view all the answers

<p>It raises government revenue and incentivizes emission reductions. (A)</p> Signup and view all the answers

<p>Costs that are imposed on society and not borne by the producers. (C)</p> Signup and view all the answers

<p>It internalizes the social cost of greenhouse gas emissions. (A)</p> Signup and view all the answers

A situation where the free market fails to allocate resources efficiently, resulting in suboptimal outcomes.

The uncompensated impact of one person's actions on the well-being of a bystander.

An externality that imposes costs on others, like pollution from a factory affecting nearby residents.

An externality that provides benefits to others, such as a neighbor's beautiful garden.

The additional cost of producing one more unit of a good, including both private and external costs.

The additional benefit of consuming one more unit of a good, including both private and external benefits.

The quantity of a good produced when marginal cost equals marginal benefit, leading to efficient resource allocation.

The economic analysis of how resource allocation affects social well-being, considering both private and social costs and benefits.

An external cost, imposed on a third party without their consent, by a producer or consumer. For example, pollution.

An external benefit, received by a third party without their consent, by a producer or consumer. For example, a beekeeper benefiting from a nearby orchard.

A government regulation directly aiming to limit a specific activity, like setting emission limits for factories.

A tax levied on activities generating negative externalities, like a carbon tax on fossil fuel emissions.

Permits for limited pollution, allowing firms to trade them. This creates a market for pollution, encouraging firms to reduce emissions if it's cheaper than buying permits.

Financial aid to activities with positive externalities, such as grants for education or tax breaks for research and development.

If property rights are clear and transaction costs are low, resources will naturally go to their most valued use, regardless of who owns them initially.

A tax on each unit of carbon emissions, aimed at internalizing the social cost of climate change.

A good that is non-excludable (people cannot be prevented from using it) and non-rival (one person's use does not diminish the availability to others).

A good that is non-excludable (people cannot be prevented from using it) but rival (one person's use diminishes the availability to others).

A problem that arises with public goods when people can enjoy the benefits of a good without contributing to its cost, leading to underproduction of the good.

A good that is both excludable (people can be prevented from using it) and rival (one person's use diminishes the availability to others).

A good that is excludable (people can be prevented from using it) but non-rival (one person's use does not diminish the availability to others).

The overuse and depletion of a shared resource due to individual incentives to maximize personal gain.

Government intervention aimed at preventing overuse and depletion of common resources.

A situation where a good, such as vaccination, provides benefits to everyone, even those who don't contribute to its provision.

The difficulty or impossibility of preventing individuals from benefiting from a public good, even if they don't pay for it.

The characteristic of a public good where one person's consumption does not reduce the amount available for others.