Reference no: EM133165316

Question 1  Which one of the following is the best example of a negative externality?

A misleading ad causes a buyer to make a bad?purchase

Landscaping a private home improves a?neighborhood

Installing a home security system

Smoking in public

Question 2 Which one of the following is the best example of a positive externality?

CO2 pollution

Designated bike lanes separated from vehicle?traffic

2-for-1 deals

Loud parties in a house

Question 3 True or False: Externalities are naturally reflected in market prices without any policy intervention.

True

False

Question 4 The existence of a positive externality implies that the activity level is:  

Too little

About right

Too much

Need more information

Question 5 Externalities can cause market failure. Which one of the following is NOT a solution for the market failure?

Taxes

Subsidies

Price discrimination

Cap and trade

Question 6 Which one of the following is TRUE about a negative externality when applying a per unit tax to the marginal private cost:  

The marginal private cost can be brought down to the same level as the marginal social?cost

The marginal private cost can be brought up to the same level as the marginal social?cost

Quantity is?raised

Prices are reduced

Question 7 The presence of a positive externality implies a need to:  

Not intervene in a well-functioning?market

Apply a tax to the source of the?externality

Apply a subsidy to the source of the?externality

Raise prices on the source of the?externality

Raise prices on the destination of the?externality

Question 8 The use and propagation of information creates potential externalities in which of the following ways:  

Psychographic profiling

Gene inheritance revelation

Fake news propagation

Improved search

Setting of standards

All of?the above