Question

1)When consumption of a good is nonrival and​ nonexcludable, the good is a

A. mixed good. B. private good. C. service. D. public good.

2)An externality can be a

A.benefit but not a cost.

B.cost but not a benefit.

C.cost or a benefit.

D.marginal cost but not a total cost

3)

An externality occurs when

A.the marginal social cost of an activity increases as that activity is increased.

B.some of the costs of producing a good are paid by someone other than the producer.

C.the costs of producing a good are paid entirely by the producer.

D.Both answers A and C are correct.

4)

The external benefit of a good

A.equals its producer surplus.

B.equals its consumer surplus.

C.equals its total surplus.

D.is the gain from a transaction falling on people who did not participate in the transaction

5)

An example of an externality occurs when a chemical factory

A.overworks its employees.

B.dumps waste in a river upstream from a popular fishing spot.

C.produces fertilizers that kill plants rather than feed them.

D.produces fertilizers that do not help plants grow.

6)

A private cost is a cost of production that is

A.

borne by someone other than the producer of a good.

B.

borne by the producer of a good.

C.

measured in total terms.

D.

measured in marginal terms.

Answer 1

1) option D)

public good is when it's non rival & non excludable

2) option C)

externality can be positive or negative

3) option B)

externality occurs when cost & benefit of an activity, falls on third party, for which no payment is made

4) option D)

people dont pay for the external benefit , that result from positive externality

5) option B)

option C & D imply positive externality, bcoz this research help the society

6) option B)

private cost of production is borne by the producer himself only