Market Equilibrium and Externalities

What happens to the quantity of soda produced as the price increases?

• It decreases.

• It remains the same.

• It increases.

• It fluctuates randomly.

What does a downward sloping demand curve indicate?

• As price decreases, demand decreases.

• As price increases, demand increases.

• Demand is unaffected by price changes.

• As price increases, demand decreases.

What is the equilibrium price in a market?

• The price where supply exceeds demand.

• The price set by the government.

• The price where demand exceeds supply.

• The price where supply equals demand.

What is the marginal private cost?

• The cost to society of producing one more unit.

• The cost to producers of producing one more unit.

• The benefit to consumers of consuming one more unit.

• The total cost of production.

What is a negative externality associated with soda production?

• Improved public health.

• Higher consumer satisfaction.

• Pollution from soda cans.

• Increased employment.

How does society determine the optimal quantity of a good to produce?

• By minimizing private costs.

• By equating marginal social cost and marginal social benefit.

• By maximizing private benefits.

• By following market trends.

What is deadweight loss?

• The loss of government revenue.

• The loss of total surplus due to inefficiency.

• The loss of producer surplus.

• The loss of consumer surplus.

What is a positive externality in the exercise equipment market?

• Increased pollution.

• Higher healthcare costs.

• Improved public health.

• Decreased consumer satisfaction.

How can society address deadweight loss from externalities?

• By decreasing production.

• By increasing production.

• By adjusting prices to reflect social costs and benefits.

• By ignoring the externalities.

What is the marginal social benefit?

• The total benefit of consumption.

• The cost to society of producing one more unit.

• The benefit to producers of producing one more unit.

• The benefit to society of consuming one more unit.