pf chapter 3

A progressive tax is a tax imposed that is equal in value to the negative externality 

• true

• false

An externality is the ............. and …………….. that affects the third party without his choice.

• Win, Lose

• Sell, Buy

• Cost, Benefit

• None of the above

For goods with externalities, unregulated market prices can precisely reflect the full social costs or benefit of the transaction

• true

• false

Externality can be defined as an economic agent’s utility or profit includes real variables whose values are chosen by the others without particular attention to the effect upon the welfare of the other agents they affect. According to…………

• Definition by effect

• Definition by the Reasons of existence

• Definition by Classics

• None of the above

1) ……………………… is said to exist when the effect of the externality is upon a profit relationship.

• Consumption Externality

• Positive Externality

• Positional Externality

• Production Externality

For households and producers, the externality can be ………………...

• Production externality

• Consumption externality

• Both production and consumption

• Positive Externality only

……………. participate voluntary in the transactions that affect them so they wouldn’t trade against their interest.

• Buyers

• Buyers and third party

• Third parties

• Buyers and sellers

According to the Neoclassical the existence of externalities can result in ………… outcomes

• Socially optimal

• Not socially optimal

• Neutral

•   Non obvious

The Third parties always suffer from the external cost.

• true

• false

In case of negative externality, the person affected will see it as ………….

• Higher expenses

• Violating property rights

• Both A & B

• Improving societal welfare