Economics: Externalities, Public Goods, Monopolies

What is a negative externality?

• A negative externality is a benefit that is enjoyed by a third party as a result of an economic transaction.

• A negative externality is a cost that is suffered by the buyer as a result of an economic transaction.

• A negative externality is a cost that is suffered by the seller as a result of an economic transaction.

• A negative externality is a cost that is suffered by a third party as a result of an economic transaction.

Give an example of a negative externality.

• Planting trees in a forest

• Pollution caused by a factory

• Building a new freeway to ease congestion

• Adding new internet services to reach more people

What is a positive externality?

• A positive externality is a neutral effect on a third-party.

• A positive externality is a cost incurred by a third-party.

• A positive externality is a negative impact on a third-party.

• A positive externality is a benefit enjoyed by a third-party.

Provide an example of a positive externality.

• Education

• Crime

• Traffic

• Pollution

What are public goods?

• Goods that are non-excludable and non-rivalrous.

• Goods that are excludable but non-rivalrous.

• Goods that are excludable and rivalrous.

• Goods that are non-excludable but rivalrous.

Name one characteristic of public goods.

• Excludability

• Non-excludability

• Rivalry

• Private ownership

What is a natural monopoly?

• A natural monopoly is a type of monopoly that occurs when a single firm can serve the entire market at a higher cost than two or more competing firms.

• A natural monopoly is a type of monopoly that occurs when multiple firms can serve the entire market at a lower cost than a single firm.

• A natural monopoly is a type of monopoly that occurs when a single firm can only serve a small portion of the market at a lower cost than two or more competing firms.

• A natural monopoly is a type of monopoly that occurs when a single firm can serve the entire market at a lower cost than two or more competing firms.

Explain why natural monopolies exist.

• Natural monopolies exist because they have a monopoly on natural resources.

• Natural monopolies exist because they have exclusive government support.

• Natural monopolies exist because they have superior marketing strategies.

• Natural monopolies exist due to economies of scale and cost advantages over potential competitors.

What is the difference between a natural monopoly and a regular monopoly?

• A natural monopoly occurs when multiple firms can serve the entire market at a lower cost than a single firm. A regular monopoly is a market situation where there are multiple sellers or providers of a particular product or service, with close substitutes.

• A natural monopoly occurs when a single firm can serve the entire market at a lower cost than multiple firms, due to economies of scale. A regular monopoly is a market situation where there is only one seller or provider of a particular product or service, with no close substitutes.

• A natural monopoly is a market situation where there is only one seller or provider of a particular product or service, with no close substitutes. A regular monopoly occurs when a single firm can serve the entire market at a lower cost than multiple firms, due to economies of scale.

• A natural monopoly and a regular monopoly are the same thing, just different names for the same concept.

Give an example of a natural monopoly.

• Water supply

• Internet service providers

• Electricity distribution

• Public transportation