Economic quiz 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.

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.

If the production of a good generates a positive externality, the government can increase allocative efficiency by: 

• taxing the producer of the good
  
• setting a price ceiling to encourage production of the good
  
• subsidizing the producer of the good 
• prosecuting firms that produce the good without proper permits
  

Which of the following best represents a positive externality? 

• Purchasing a pass for an amusement park 
• Being disturbed by neighboring construction noise 
• Dumping waste on someone else’ s property 
• Enjoying watching birds at a neighbor’s bird feeder 

The difference between what consumers are willing to pay for units of a good and the price consumers actually pay for units of the good is called:

• a positive externality 
• marginal utility
  
• consumer surplus 
• producer surplus
  

Which of the following best represents a negative externality?

• selling a pass for an amusement park

• Being happy at the neighboring construction noise

• Dumping waste on someone else’ s property

• Enjoying watching birds at a neighbor’s bird feeder