Externalities

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

A ______ Externality occurs when a cost of production or consumption falls on a 3rd Party.

• Negative
• Neutral
• Positive

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

• Negative
• Neutral
• Positive

Which of the following is the best example of a public good?

• A lighthouse on a rocky coastline

• Tickets to the Super Bowl

• A granola bar

• A cup of coffee

• A magazine subscription

Which of the following best describes a club good?

• a toll road

• a street light

• an economics textbook

• a Popeye's chicken sandwich

• a city park

A negative externality will:

• produce the right amount for society

• produce too little for society

• produce too much for society

• create spillover benefits to society

• increase the efficiency to society

A positive externality will:

• produce the right amount for society

• produce too little for society

• produce too much for society

• create spillover benefits to society

• increase the efficiency to society

What could the government do to most effectively avoid a free rider problem?

• Enact stricter antitrust legislation

• Provide more complete information about the relevant goods

• Supply public goods using tax dollars

• Tax those creating negative externalities

• Subsidize those creating positive externalities

A good is excludable if:

• it is not an inferior good

• it is not a normal good

• government can regulate its availability

• people can be prevented from using it

• none of the answers

A public good is:

• rival in consumption

• non-rival in consumption

• excludable

• non-excludable

• non-rival in consumption and non-excludable