What is an externality?

Externalities and Government Intervention

Interactive Video
•
Business, Social Studies, Economics
•
9th - 12th Grade
•
Hard

Patricia Brown
FREE Resource
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10 questions
Show all answers
1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
A decision that only affects the decision-maker
A private agreement between two parties
A cost or benefit affecting a bystander not considered by the decision-maker
A government policy to regulate markets
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
In the example of a polluting factory, what is the social cost?
The cost of production for the factory
The cost of pollution to the factory
The cost of raw materials
The extra cost to individuals affected by pollution
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What happens when there is a negative externality?
Production stops completely
No change in production
Overproduction occurs
Underproduction occurs
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is the result of not having property rights in the context of externalities?
No impact on production
Underproduction of negative externalities
Overproduction of negative externalities
Efficient market outcomes
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is a positive externality?
A cost that affects a bystander
A benefit that only affects the decision-maker
A benefit affecting a bystander not considered by the decision-maker
A benefit that affects a bystander and is considered by the decision-maker
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Why is education considered a positive externality?
It benefits both the individual and the economy
It is overproduced
It has no social benefits
It only benefits the individual
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is the private benefit of education?
Decreased economic growth
Lower social benefits
Increased pollution
Higher income and better job prospects
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