BackExternalities: Social Benefits and Social Costs quiz #3
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BackWhich one of the following explains why so few firms are global?
High costs and risks, including externalities, explain why few firms are global. Which of the following is a type of control that relies on economic forces?
Pigovian taxes rely on economic forces to control negative externalities. The most common impact of emigration on the country of origin is
Loss of skilled labor, which can be a negative externality. Which of the following is a possible option to employ when demand exceeds capacity?
Raising prices is a possible option when demand exceeds capacity. Which of the following mitigation tactics could reduce economic risk?
Diversifying production can reduce economic risk. Which of the following is a possible option to employ when demand exceeds capacity?
Expanding production capacity is a possible option. Tariffs and subsidies are both types of
Tariffs and subsidies are both types of trade barriers. In most cases, trade barriers are harmful to an economy.
True; trade barriers often reduce efficiency and create negative externalities. Producing a good is efficient as long as the external benefits exceed the external costs.
True; efficiency requires that external benefits outweigh external costs. A negative result of high tariffs is that they can sometimes lead to
High tariffs can lead to trade wars and reduced economic welfare. Which of the following is an example of a negative externality?
Factory pollution affecting local residents is a negative externality. Which of the following describes a positive externality?
A positive externality is a benefit received by bystanders not involved in a transaction. Tariffs and trade agreements are part of which element of PESTEL?
Tariffs and trade agreements are part of the Economic element of PESTEL. A negative externality or spillover cost occurs when
A negative externality occurs when a transaction imposes costs on bystanders. The product-variety externality is associated with the
The product-variety externality is associated with increased consumer choices benefiting society. A negative externality exists when
A negative externality exists when a transaction imposes uncompensated costs on others. An externality is the uncompensated impact of
An externality is the uncompensated impact of one person's actions on the well-being of a bystander. The terms social cost and external cost are synonyms
False; social cost includes both private and external costs. Each of the given scenarios involves an externality
True; if bystanders are affected, the scenario involves an externality. Some economists argue that early child care generates an external benefit to society
True; early child care can increase productivity and social well-being. Negative externalities lead markets to produce
Negative externalities lead markets to produce more than the socially optimal quantity. Social costs include both private costs and external costs.
True; social costs are the sum of private and external costs. What is a benefit of importing goods and services?
Importing goods can increase variety and lower prices, creating positive externalities. An example of externality that can have a negative effect on a firm
Pollution regulations imposed due to externalities can increase a firm's costs. If there are external benefits associated with the consumption of a good or service
The market will underproduce the good or service compared to the socially optimal level. A market with negative externalities will tend to
A market with negative externalities will tend to overproduce the good. A negative externality or spillover cost occurs when:
A negative externality occurs when a transaction imposes costs on others not involved.
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