Externalities in Economics

Which of the following best describes a negative externality of pollution?

• An increase in healthcare costs due to respiratory diseases.

• A decrease in the cost of production for polluting industries.

• Improved public health as a result of cleaner air.

• Enhanced biodiversity in polluted areas.

How does education serve as a positive externality?

• It increases the private costs for individuals who pursue higher education.

• It leads to a more informed electorate that can make better voting decisions.

• It reduces the overall knowledge base of a society.

• It only benefits the individual receiving the education and has no impact on society.

In what way is healthcare considered a positive externality?

• It contributes to a decline in the population due to improved health.

• It increases the spread of communicable diseases.

• It enhances the productivity of a population by reducing sick days.

• It raises the cost of living due to increased demand for health services.

What is a positive externality associated with advancements in technology?

• They can lead to job displacement due to automation.

• They may increase the digital divide between different socioeconomic groups.

• They can improve overall productivity and create new markets.

• They can result in a decrease in personal communication skills.

Which of the following is an example of congestion as a negative externality?

• Reduced travel times during off-peak hours.

• Increased fuel efficiency due to better traffic flow.

• Increased stress and health issues related to longer commute times.

• Improved public transportation as a result of less traffic.

What is a common solution to address the negative externality of pollution?

• Subsidizing the production of pollution-intensive goods.

• Implementing a carbon tax to internalize the environmental costs.

• Encouraging the use of more fossil fuels to promote economic growth.

• Reducing regulations on industries to increase their competitiveness.

How does society benefit from the positive externality of education?

• By reducing the number of schools and educational institutions.

• Through the creation of public goods such as libraries and museums.

• By increasing the cultural diversity in educational settings.

• Through higher levels of civic engagement and lower crime rates.

What is a potential negative externality of healthcare that policymakers must address?

• Overcrowding in hospitals leading to longer wait times.

• Increased life expectancy and quality of life.

• Reduction in the spread of infectious diseases.

• More efficient use of medical resources and equipment.

Which of the following is a way that technology can inadvertently create negative externalities?

• By making information more accessible to a wider audience.

• Through the displacement of workers due to automation.

• By facilitating remote work and reducing office space needs.

• By increasing the efficiency of supply chain management.

What is a measure that can be taken to reduce the negative externality of congestion?

• Decreasing public transportation options to encourage carpooling.

• Building more roads to accommodate increasing traffic.

• Implementing congestion pricing to discourage driving during peak hours.

• Encouraging businesses to have uniform 9-to-5 working hours.