A. the benefit that accrues to the buyer in a market
B. the cost that accrues to the seller in a market
C. none of these answers
D. the compensation paid to a firm’s external consultants.
E. The uncompensated impact of one person’s actions on the well-being of a bystander
Externality & Internality
A negative externality (that has not been internalized) causes the ?
A. optimal quantity to exceed the equilibrium quantity.
B. equilibrium quantity to be either above or below the optimal quantity
C. equilibrium quantity to equal the optimal quantity
D. equilibrium quantity to exceed the optimal quantity
Tradable pollution permits ?
A. reduce the incentive for technological innovations to further reduce pollution.
B. set the price of pollution.
C. determine the demand for pollution rights.
D. Set the quantity of pollution
The government engages in a technology policy ?
A. by allocating tradable technology permits to high technology industry.
B. to internalize the positive externality associated with technology-enhancing industries.
C. to help stimulate private solution to the technology externality
D. to internalize the negative externality associated with industrial pollution
A positive externality (that has not been internalized) caused the ?
A. equilibrium quantity to exceed the optimal quantity
B. equilibrium quantity to equal the optimal quantity
C. optimal quantity to exceed the equilibrium quantity
D. equilibrium quantity to be either above or below the optimal quantity
When wealthy alumni provide charitable contributions to their universities to reduce the tuition payments of current students it is an example of ?
A. an attempt to internalize a positive externality
B. an attempt to internalize a negative externality
C. a Pigouvian tax
D. a command-and-control policy
A positive externality generates ?
A. a social cost curve that is above the supply curve (private cost curve) for a good
B. none of these answers
C. a social value curve that is above the demand curve (private value curve) for good
D. a social value curve that is below the demand curve (private value curve) for a good
Roberto and Thomas live in a university hall of residence. Reberto values playing loud music at a value of €100. Thomas values peace and quiet at a value of €150. Which of the following statements is true about an efficient solution to this externality problem if Roberto has the right to play loud music and if there are no transaction costs ?
A. Thomas will pay Roberto between €100 and €150 and Roberto will continue to play loud music
B. Roberto will pay Thomas €150 and Roberto will continue to play loud music
C. Thomas will pay Roberto between €100 and €150 and Roberto will stop playing loud music
D. Roberto will pay Thomas €100 and Roberto will stop playing loud music
