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WorksheetsMarket Externalities
Total questions: 12
Worksheet time: 2hrs 0mins
At what level should an allocatively efficient market operate?
MSC = MSB
MPC = MPB
MPB = MSB
MPC = MSC
What condition best describes a positive externality of consumption?
MSB > MPB
MPB > MSB
MSC > MPC
MPC > MSC
What condition best describes a negative externality of consumption?
MSB > MPB
MPB > MSB
MSC > MPC
MPC > MSC
What condition best describes a negative externality of production?
MSB > MPB
MPB > MSB
MSC > MPC
MPC > MSC
What condition best describes a positive externality of production?
MSB > MPB
MPB > MSB
MSC > MPC
MPC > MSC
Goods with negative externalities (demerit goods), in a free market, are generally ________
Overprovided
Underprovided
The diagram shown represents a _____
Negative externality of consumption
Negative externality of production
Positive externality of consumption
Positive externality of production
Review the diagram below. Addressing the externality shown by implementing a subsidy, would lead to a ______ (higher/lower) equilibrium price (P), and a ______ (higher/lower) equilibrium quantity (Q).
Higher price, lower quantity
Lower price, lower quantity
Higher price, higher quanity
Lower price, higher quantity
The diagram shown represents a ______
Negative externality of production
Negative externality of consumption
Positive externality of production
Positive externality of consumption
Steel production is responsible for about 8% of global CO2 emissions. Which would be the least appropriate solution to help resolve the observed negative externality?
Indirect tax on steel (carbon tax)
Subsidizing steel production
Regulation on the use of coal for steel production
Tradable emissions permits (cap and trade)
Which of the following policies would be least likely to correct a market failure caused by the under-consumption of vaccinations?
Direct provision of vaccinations for low or no cost
Positive advertising that encourages people to get vaccinated
A subsidy that makes vaccinations cheaper
Encouraging the formation of a private, profit-maximizing monopoly in the market for vaccines
Who painted this?
Picasso
Rembrandt
Van Gogh
Pollock
