Question

I. The pollution emitted by a car is an example of atn b. social eextenal e. publio-good 2. Lila shares a house with two other people. She is a concert pianist and often practices an home. One roommate enjoys listening to her practice, but the other does not. For the roommate who enjoys listening to Lila play, this is an example of for the other , it is an example of a. the tragedy of the commons; b. e. a positive extermality; the free-rider problem d. the free-rider problem; the tragedy of the commons e a negative externality; the tragedy of the commons a positive externality; a negativ e externality 3. A negative externality exists whenever a. there are no internal costs. production of a good creates an external cost. e production of a good creates an external benefit. d. b. production of a good has no social cost. e production of a good has no social benefit. 4. The third-party problem occurs when a market activity leads to a negative externality b. a. occurs when a market activity leads to a positive externality. c occurs when a market activity leads to a negative or a positive externality d. is the same as the free-rider problem. is associated with the production of private goods but not public goods. e. Jack's roommate is studying to be a drummer in a rock band. She practices in Jack's apartment every evening for three hours and 5. the noise makes it difficult for Jack to concentrate. This is an example o the free-rider problem. the third-party problem. d. e. a. a positive externality. the tragedy of the commons. b. c. an internal cost market equilibrium, 6. Consider a market where production of a good generates a negative externality. In the too much of the good is being produced. a. b. too little of the good is being produced. there is no deadweight loss. c. d. the external costs have been internalized. e. firms are not maximizing profit. Which of the following is a benefit of internalizing a negative externality? a. 7. b. c. d. All pollution is eliminated. More output is produced. The deadweight loss is eliminated. The good is sold for a lower price.

Answer 1

1.Pollution by a car is an example of social cost because it causes environmental pollution which adversely affect the society.

Answer-B

2.Positive externality because she benefits,negative externality because the other roommate is adversely affect Ed.

Answer-B

3.A negative externality creates an external cost(cost which results from indirect transaction).

Answer-B

4.A third party problem results when a third party which is not directly involved in a transaction is negatively affected by the transaction.

Answer-A