#1
What is economic efficiency?
Minimizing waste and maximizing resources
ExplanationEfficient allocation of resources to maximize output
#2
In the context of externalities, what is a spillover cost?
A cost that affects third parties not directly involved in the economic transaction
ExplanationCosts imposed on others by an economic activity
#3
What is the purpose of the Coase Theorem in addressing externalities?
To emphasize the role of property rights and negotiation in resolving externalities
ExplanationRole of property rights in externalities
#4
What is the free-rider problem in the context of public goods?
A situation where individuals benefit from a public good without paying for it
ExplanationBenefitting from public goods without contributing
#5
What is the role of property rights in addressing externalities?
Clear and well-defined property rights can facilitate private negotiations and internalize externalities
ExplanationRole of property rights in resolving external effects
#6
Which of the following is an example of a positive externality?
Vaccination programs preventing disease spread
ExplanationBenefits enjoyed by third parties from an action
#7
What is the Coase Theorem related to externalities?
Parties can bargain and reach efficient outcomes without government intervention
ExplanationPrivate negotiation to resolve externalities
#8
Which market structure is most susceptible to the presence of externalities?
Perfect competition
ExplanationMany small firms, limited market power
#9
What is the tragedy of the anticommons?
A situation where too many property rights slow down or halt resource development
ExplanationOverallocation of property rights
#10
Which of the following is an example of a common-pool resource?
Fishery
ExplanationResource where exclusion is costly
#11
How does a Pigovian tax work in the context of externalities?
It discourages the production of negative externalities by imposing taxes
ExplanationTax to internalize external costs
#12
What is the tragedy of the commons?
A situation where private ownership leads to overuse and depletion of shared resources
ExplanationOveruse of resources due to lack of ownership
#13
What is the difference between a public good and a common resource?
Common resources are excludable, public goods are non-excludable
ExplanationExcludability of goods
#14
How does technological change influence externalities?
It can either increase or decrease externalities depending on the nature of the change
ExplanationImpact of technology on external effects
#15
What is the difference between a positive externality and a public good?
Positive externality is excludable, public good is non-excludable
ExplanationExcludability of benefits