Economic Efficiency and Externalities Quiz Test your knowledge on externalities, market failures, and policy tools with this quiz. Explore concepts like Pigovian taxes, Coase Theorem, and tragedy of the commons.
#1
Maximizing government revenue
Minimizing waste and maximizing resources
Increasing inflation rates
Promoting income inequality
#2
A cost that affects only the producer
A cost that affects third parties not directly involved in the economic transaction
A cost that is fully borne by the consumer
A cost that is not considered in economic analysis
#3
To highlight the inevitability of government intervention
To emphasize the role of property rights and negotiation in resolving externalities
To advocate for higher taxes on negative externalities
To propose subsidies for positive externalities
#4
A situation where the government provides goods for free
A situation where individuals benefit from a public good without paying for it
A situation where private firms offer goods at no cost
A situation where individuals refuse to consume public goods
#5
Property rights have no impact on externalities
Clear and well-defined property rights can facilitate private negotiations and internalize externalities
Property rights always lead to market failures
Property rights are only relevant for positive externalities
#6
Air pollution from factories
Vaccination programs preventing disease spread
Traffic congestion in urban areas
Cigarette smoking
#7
Government intervention is always necessary
Parties can bargain and reach efficient outcomes without government intervention
Taxation is the only solution to externalities
Externalities are unavoidable and should be ignored
#8
Perfect competition
Monopoly
Monopolistic competition
Oligopoly
#9
A situation where resources are underused due to lack of property rights
A situation where too many property rights slow down or halt resource development
A situation where externalities lead to market failure
A situation where the government owns all resources
#10
Public park
Fishery
Private beach
Movie theater
#11
It encourages the production of negative externalities
It discourages the production of negative externalities by imposing taxes
It promotes income equality
It subsidizes industries with positive externalities
#12
A situation where private ownership leads to overuse and depletion of shared resources
A market failure due to government intervention
An example of a positive externality
A situation where externalities are internalized
#13
Public goods are excludable, common resources are non-excludable
Common resources are excludable, public goods are non-excludable
Both are non-excludable
Both are excludable
#14
It has no impact on externalities
It can either increase or decrease externalities depending on the nature of the change
It always reduces externalities
It always increases externalities
#15
Positive externality is non-excludable, public good is excludable
Positive externality is excludable, public good is non-excludable
Both are non-excludable
Both are excludable
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