Option 1. True
Positive externality leads to increased production than the demand which would lead under consumption leading to market failure.
When a positive externality exists, the market is said to fail because it overproduces the good...
In the case of a positive externality: The private market produces too much of the good The market price is below the efficient price Efficiency requires that the government impose a tax Market price reflects the social costs of production Efficiency requires that the government impose a subsidy
Question 2 (1 point) A positive externality results in the market quantity being less than the socially optimal quantity True False Question 3 (1 point) Which of the following is a pure public good? National Defense Police protection Bottled water Education
In case when there is positive externality in the production of some good, the tariff on this good a) is an example of dumping b) can be welfare improving c) will hurt domestic producers d) will certainly decrease welfare
good with an external benefit (positive externality) is a market ________ because__________.a.bonus // many people are benefiting other than simply the buyer of the good.b.failure // too many people are buying the good for economic efficiencyc.failure // too few people are buying the good for economic efficiencyd.bonus // free riders increase the value of the good
A positive externality arises when a third party, outside the market transaction, fails to allocate resources efficiently Pays less for the good or service benefits from a market transaction pays a pollution tax to balance social costs
If the production of a good generates a positive externality, then: Multiple Choice production of the good is harmful. there will be deadweight loss at the market equilibrium quantity. total economic surplus will be maximized at the market equilibrium quantity. the government should tax producers of the good.
Using a supply-demand diagram, illustrate a: a. negative externality b. Positive externality c. in which of the above would the market, if left alone, produce too much of the good?
Question 1 True or false? (2 points) A positive externality does not lead to a deadweight loss because more of the a. good should be produced, not less. b. (2 points) Economies of scale and limited demand can form a natural barrier to entry that can create a natural oligopoly. (2 points) The Coase theorem implies that we never need to worry about regulating c. negative externalities as long as we only assign property rights to the polluter. d. (2...
61. A positive externality ________. a. gives rise to external benefits b. imposes an additional cost on society c. leads to a higher economic profit d, leads to increasing returns to scale 62. If the production of a good involves positive externalities, ________. a. the average cost of production of the good in the long run is zero b. the variable cost of production of the good is zero c. the market price of the good is higher than its...
45. A negative externality or spillover cost occurs when A) firms fail to achieve productive efficiency B) firms fail to achieve allocative efficiency the price of a good exceeds the marginal cost of producing it. the total cost of producing a good exceeds the costs borne by the producer. 46. s, Quantity Quantity Refer to the diagrams for two separate product markets. Assume that society's optimal level of output in each market is Qo and that government purposely shifts the...