EXTERNALITIES

Front

Driving a car on crowded highway produces

Back

a negative externality.

Front

Apartment dwellers who buy fire alarms or fire extinguishers generate a

Back

positive externality.

Front

The market should produce the quantity where

Back

marginal social cost equals marginal social benefit.

Front

A ______ Externality occurs when a cost of production or consumption falls on a 3rd Party.

Back

Negative

Front

Individuals and businesses do too much of these activities because they may not weigh the costs to others.

Back

negative externality

Front

Which of the following is an example of a negative externality? education, pollution, home remodeling

Back

pollution

Front

What is one reason that firefighter services are considered a public good?

Back

Everyone in the community benefits from it.

Front

Which of the following is an example of a negative externality resulting from an outdoor concert in the park? College students nearby get to enjoy free entertainment, An elderly woman in her apartment hears a song that she liked as a child, A pizza parlor stays open later and makes a bigger profit than most nights, A traffic jam occurs as drivers hunt for parking spots near the concert.

Back

A traffic jam occurs as drivers hunt for parking spots near the concert.

Front

Which of the following explains why a city fireworks display on the Fourth of July is provided as a public good? Nonpayers cannot be prevented from seeing the fireworks.

Back

Nonpayers cannot be prevented from seeing the fireworks.

Front

Market failure occurs whenever

Back

free markets fail to distribute resources efficiently.