Understanding Externalities and Market Interventions

Understanding Externalities and Market Interventions

Assessment

Interactive Video

Business, Social Studies, Economics

10th Grade - University

Hard

Created by

Aiden Montgomery

FREE Resource

The video explores the concept of externalities, focusing on the negative impacts of plastic bags. It discusses how external costs are not factored into market equilibrium and examines policy options like bans, quotas, and taxes to address these costs. The video concludes that a tax on plastic bags could optimize total surplus by aligning the equilibrium quantity with societal benefits, assuming accurate external cost assessment.

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10 questions

Show all answers

1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is a negative externality associated with plastic bags?

Improved recycling rates

Increased production costs

Environmental damage

Higher consumer demand

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

How is the external cost of a plastic bag quantified in the video?

5 cents per bag

1 cent per bag

10 cents per bag

2 cents per bag

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What happens to the market equilibrium when external costs are not considered?

It leads to underproduction

It results in overproduction

It shifts to a higher price

It remains unchanged

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is one potential action a 'benevolent emperor' could take to address external costs?

Lower taxes

Increase subsidies

Encourage more production

Ban plastic bags

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Why might banning plastic bags not be the best option?

It benefits only a few

It is too costly to implement

It increases demand

It destroys potential surplus

6.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is a challenge associated with implementing a quota on plastic bags?

It increases production costs

It reduces government revenue

It is easy to enforce

It requires precise knowledge of demand

7.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

How does a tax on plastic bags help address negative externalities?

By reducing consumer demand

By shifting the marginal cost curve

By increasing production

By eliminating competition

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