Externalities: Social Benefits and Social Costs quiz #1 Flashcards
Externalities: Social Benefits and Social Costs quiz #1
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Which of the following is an example of a negative externality? Pollution from a factory affecting nearby residents is an example of a negative externality. What is an externality? An externality is a cost or benefit imposed on bystanders who are not directly involved in a market transaction. Which of the following is an example of a positive externality? Vaccinations that reduce the spread of disease in a community are an example of a positive externality. Which would be a negative externality of increased satellite usage worldwide? Increased space debris, which can threaten other satellites and space missions, is a negative externality. What is the main economic difference between a tariff and a quota? A tariff is a tax on imports, while a quota is a limit on the quantity of imports allowed. Which of these outcomes are possible negative externalities? Check all that apply. Possible negative externalities include pollution, noise, and congestion. Which of the following could lead to a positive externality on the international scale? International cooperation on disease control can lead to positive externalities by improving global health. Which of the following is an example of an external cost? The health problems suffered by residents due to air pollution from a factory are an external cost. Which of the following will most likely result from deflation? Deflation can lead to decreased consumer spending and increased unemployment. Which of the following results in a positive externality? Education results in a positive externality by increasing societal productivity. When do demand-side market failures occur? Demand-side market failures occur when the market does not account for all social benefits, such as with positive externalities. Which statement defines externality? An externality is a cost or benefit that affects people not directly involved in a transaction. The presence of network effects can predispose an industry toward which of the following? Network effects can predispose an industry toward monopoly or market dominance. In the absence of externalities, what happens in a market? In the absence of externalities, the market equilibrium is efficient and reflects all costs and benefits. Which of these is not an advantage of secondary data? Secondary data may not be specific to the current research question, which is not an advantage. Which of these activities will most likely result in an external benefit? Getting vaccinated will most likely result in an external benefit by reducing disease spread. Which of the following illustrates the concept of a negative externality? A factory dumping chemicals into a lake, harming nearby residents, illustrates a negative externality. Which of the following is an example of crowding out? Government spending that reduces private investment is an example of crowding out. Which of the following is an example of a negative externality (additional social cost)? Noise from a loud dog disturbing neighbors is a negative externality. Which of the following would be classified as a positive externality? Early childhood education that benefits society is a positive externality. Which of the following activities is most likely to produce an externality? Driving a car can produce externalities such as air pollution. Which of the following mitigation tactics could reduce economic risk? Implementing regulations to limit pollution can reduce economic risk from negative externalities. Which of these activities will most likely impose an external cost? Operating a factory that emits pollution will most likely impose an external cost. Which of the following is a disadvantage of globalization? Globalization can lead to negative externalities such as environmental degradation. Which of the following is an example of an externality? A neighbor's loud music affecting your sleep is an example of an externality. An import quota does which of the following? An import quota restricts the quantity of a good that can be imported. An optimal tax on pollution would result in which of the following? An optimal tax on pollution would internalize the external cost and reduce overproduction. Which of the following is not an effect of our country running a trade deficit? Running a trade deficit does not directly cause negative externalities. Which of the following items does not result in a permanent difference? Temporary changes in market conditions do not result in a permanent difference. What happens when the prices of complements or substitutes for a product change? Changes in the prices of complements or substitutes can shift demand and affect market equilibrium. Free trade among countries has what effect on prices? Free trade generally lowers prices by increasing competition and efficiency. Crowding out is most likely to occur with which of the following changes? Crowding out is most likely when government spending increases and reduces private sector investment. Which is an example of an external cost? Water pollution from industrial waste is an example of an external cost. Which of the following would be a reason China would place a tariff on Canadian lumber? China might place a tariff to protect domestic producers from foreign competition. Which of the following is an economic challenge related to international business? Managing negative externalities such as pollution is an economic challenge in international business. Which of the following statements is not true of both pollution permits and corrective taxes? Both do not guarantee zero pollution; they aim to internalize external costs. Which of the following measures the impact of a negative supply shock? A decrease in output and increase in prices measures the impact of a negative supply shock. Which of the following is a disadvantage of an economic group? Economic groups may create negative externalities such as trade diversion. Which activity is most likely to create a positive externality? Providing public education is most likely to create a positive externality. Which of the following is always true about a negative externality? A negative externality imposes a cost on bystanders not involved in the transaction.
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