Externality

Which of the following is an example of a positive externality resulting from an outdoor band concert?

• An elderly woman in her apartment hears a song that she liked as a child.

• A pair of endangered birds leave their nest in a nearby tree when the concert starts.

• A pizza parlor closes early, because all of its customers are at the concert.

• A traffic jam occurs as drivers hunt for parking spots near the concert.

Which of the following explains why a city fireworks display on the Fourth of July is provided as a public good?

• Fireworks displays usually take place in a public area.

• Fireworks are a scarce resource.

• Nonpayers cannot be prevented from seeing the fireworks.

• Each consumer pays a fee to see the fireworks.

A ______ externality occurs when a benefit of production or consumption falls on a 3rd Party.

• Negative
• Neutral
• Positive

Public or Private?

• Public

• Private

Public or Private?

• Public

• Private

When a third party member is affected by the interaction of a buyer and seller, we call this

• An externality
• The tragedy of the commons
• consumer surplus
• total welfare

Pollution caused by automobiles is an example of

• an innefficient allocation of resources.
• a positive externality.
• a negative externality.
• the public sector.