#1
What is an externality in economics?
A type of tax
A benefit or cost that affects a party who did not choose to incur that benefit or cost
A form of government intervention
An economic subsidy
#2
In the context of externalities, what is a technological externality?
An externality caused by advancements in technology
An externality resulting from the use of certain technologies
An externality affecting the production process of goods or services
An externality arising from the lack of technology in a market
#3
What is the difference between a pecuniary externality and a technological externality?
Pecuniary externalities involve changes in income distribution, while technological externalities involve advancements in technology.
Pecuniary externalities involve the production process of goods, while technological externalities involve changes in income distribution.
Pecuniary externalities are always positive, while technological externalities are always negative.
Pecuniary externalities are always negative, while technological externalities are always positive.
#4
In the context of externalities, what is a positional externality?
An externality caused by one's social position or status
An externality resulting from the position of a market in a global economy
An externality affecting the relative positioning of firms in a market
An externality arising from the lack of positions available in a market
#5
What is the concept of a public bad in the context of externalities?
A bad that affects only a specific group in society
A harmful effect resulting from the consumption or production of a good that is non-excludable and non-rivalrous
A government intervention to regulate externalities
A type of externality that is positive in nature
#6
Which of the following is an example of a positive externality?
Air pollution from a factory
Education benefiting society as a whole
Traffic congestion in a city
Noise pollution from construction
#7
What is the Coase Theorem in economics?
A theory about market failures
A theorem about the efficiency of bargaining and negotiation
A principle of government intervention
A law of supply and demand
#8
What is the difference between a positive externality and a public good?
Positive externalities are always non-excludable, while public goods may or may not have positive externalities.
Public goods are always excludable, while positive externalities may or may not be excludable.
Positive externalities are always rivalrous, while public goods are non-rivalrous.
Positive externalities are benefits enjoyed by individuals who did not choose to incur them, while public goods are goods that are non-excludable and non-rivalrous.
#9
What is the tragedy of the anticommons?
A situation where individuals overuse shared resources
A theory opposing the tragedy of the commons
A situation where too many property rights make resources underused
A principle of perfect competition
#10
What is the concept of internalizing externalities in the context of market solutions?
It refers to eliminating externalities entirely from the market.
It involves incorporating external costs or benefits into the decision-making of economic agents.
It is a form of government intervention to regulate externalities.
It means ignoring externalities for the sake of market efficiency.
#11
How do property rights contribute to solving the tragedy of the commons?
Property rights exacerbate the tragedy of the commons.
Property rights have no impact on the tragedy of the commons.
Clear and well-defined property rights can prevent overuse and depletion of shared resources.
Property rights are irrelevant in addressing the tragedy of the commons.
#12
How do Pigovian taxes and subsidies address externalities?
By discouraging the production of negative externalities and encouraging positive externalities
By promoting government intervention
By reducing market competition
By increasing barriers to entry
#13
What is the tragedy of the commons?
A situation where individuals, acting in their self-interest, deplete shared resources
A theory supporting open access to resources
A market equilibrium concept
A principle of perfect competition
#14
How does the presence of externalities impact the efficiency of a competitive market?
Externalities always improve market efficiency.
Externalities have no impact on market efficiency.
Externalities may lead to market failure and reduced efficiency.
Externalities only affect the distribution of wealth in a market.
#15
What is the free rider problem, and how does it relate to externalities?
The free rider problem refers to the overuse of shared resources.
It is a situation where individuals benefit from a public good without paying for it, leading to underprovision of the good.
The free rider problem is a solution to externalities.
It is a situation where individuals refuse to participate in a market with externalities.
#16
What is the difference between externalities and public goods?
Externalities are always non-excludable, while public goods may or may not have external effects.
Public goods are always rivalrous, while externalities are non-rivalrous.
Externalities are side effects of economic activities, while public goods are goods with positive externalities.
Externalities refer to the overall efficiency of the market, while public goods focus on individual consumption.
#17
How does the Coase Theorem propose resolving externalities?
Through government intervention and regulation.
By promoting competition in the market.
Through voluntary negotiations and bargaining between affected parties.
By imposing taxes on externalities.