Externalities: Social Benefits and Social Costs quiz #2 Flashcards
Externalities: Social Benefits and Social Costs quiz #2
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If the marginal cost of polluting decreased, what would happen? If the marginal cost of polluting decreased, firms may produce more pollution, increasing negative externalities. Which of the following best defines crowding out? Crowding out occurs when government activity reduces private sector investment. If property rights are clearly defined, can the economy still experience externalities? If property rights are clearly defined and enforced, externalities can be internalized and reduced. Which of the following statements is true about measuring positive externalities of education? Measuring positive externalities of education is difficult because benefits are often intangible. Pigovian taxes and direct controls are two government solutions for which market situation? Pigovian taxes and direct controls address market failures caused by negative externalities. Which is the clearest example of a positive externality? Vaccination is the clearest example of a positive externality. Which of the following generates a positive externality? Getting a flu shot generates a positive externality by reducing disease spread. Which of the following is a market incentive to discourage pollution? A tax on pollution is a market incentive to discourage pollution. Which of the following does represent positive externality? Education represents a positive externality by increasing societal productivity. Which of the following could give rise to a negative externality? Industrial production that emits pollutants can give rise to a negative externality. Which of the following are examples of negative externalities? Examples of negative externalities include air pollution, water pollution, and noise. What is an example of a 'hidden' cost associated with basing production in a foreign location? Environmental damage not accounted for in production costs is a hidden cost. How might foreign investment be problematic for a transitioning economy? Foreign investment may lead to negative externalities such as environmental harm. Which of the following factors is most likely to result in low shipping and handling costs? Proximity to markets is most likely to result in low shipping and handling costs. Which resource is sometimes unpredictable in terms of energy production? Renewable resources like wind and solar are sometimes unpredictable in energy production. Overuse of groundwater in coastal areas would most likely result in which of the following? Overuse of groundwater in coastal areas can result in saltwater intrusion, a negative externality. Which term describes the individual use of products that can lead to externalities? Consumption describes the individual use of products that can lead to externalities. Which of the following is an example of market failure? Overproduction due to negative externalities is an example of market failure. What is one way US workers are affected when jobs are outsourced to less-developed countries? US workers may experience job loss, which can be a negative externality. Which of the following would most likely constitute a negative externality affecting free resources? Overfishing in public waters is a negative externality affecting free resources. Which is an economic effect of adding healthier options to a school lunch program? Adding healthier options can create positive externalities by improving public health. Which best describes a challenge in the Middle East resulting from oil production? Environmental degradation from oil production is a challenge and a negative externality. Which two groups are negatively impacted when an import tariff is enacted? Consumers and foreign producers are negatively impacted by import tariffs. Why are U.S. firms moving manufacturing jobs overseas? U.S. firms move jobs overseas to reduce costs, but this can create negative externalities like job loss. Which of the following is true of voluntary export restraints? Voluntary export restraints limit exports to avoid stricter trade barriers. Which of the following is not one of the market failures discussed in lecture? Perfect competition is not a market failure discussed in lecture. Which of the following actions might be part of a protectionist economic policy? Imposing tariffs is part of a protectionist economic policy. If positive externalities exist in the market for flu shots, what is the result? The market will underproduce flu shots compared to the socially optimal level. Why is it easier to identify the costs than the benefits of international trade? Costs are often direct and measurable, while benefits can be intangible and widespread. How is the principle of 'there's no such thing as a free lunch' illustrated in a socialist economy? Resources used for one purpose create opportunity costs, even in a socialist economy. Which of the following is an example of a market failure? Underproduction of education due to positive externalities is a market failure. Which economic impact of computers was mentioned in this lesson? Computers can create positive externalities by increasing productivity. The data on the map most directly relates to externalities for which of the following? The data relates to externalities affecting environmental quality. Which of the following are considered negative external factors beyond the control of the business? Environmental regulations and market shocks are negative external factors. Which of the following is an example of a supply shock? A sudden increase in oil prices is an example of a supply shock. Cartels are difficult to operate for which of the following reasons? Cartels are difficult to operate due to incentives for members to cheat. Which of the following is an example of a market failure? A(n) A negative externality such as pollution is an example of a market failure. Which of the following is a consequence of the perishable quality of services? Services cannot be stored, leading to potential inefficiencies. Which scenario depicts the Leontief paradox? A country exports labor-intensive goods despite having capital abundance depicts the Leontief paradox. Why are profits not guaranteed for firms supplying nonrenewable resources? Market fluctuations and externalities such as environmental regulations affect profits.
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