Externalities *
can be either benefits or costs.
always create extra social costs.
always make society better off.
cannot be expressed in dollar amounts.
are always part of private costs or private benefits.
For a product with an external cost, the supply curve *
represents the various quantities people can buy.
is the same as the marginal private cost curve.
is the same as the marginal social cost curve.
is the same as the marginal external cost curve.
is undefined.
For a firm, its labor costs are *
a marginal benefit.
a private cost.
an external cost.
Both answers A and C are correct.
Both answers A and B are correct.
A marginal external cost of a product is equal to
what the producer has to pay to hire resources to produce another unit.
the cost someone other than the producer incurs when another unit is produced.
the cost the producer incurs to produce another unit.
what the consumer must pay when he or she buys the good or service.
None of these answers describes a marginal external cost.
Which of the following equations is correct?
MC = MSC + marginal external cost
MSC = MC ÷ marginal external cost
MSC = MC + marginal external cost
MSC = MC × marginal external cost
MC = marginal external cost - MSC
If the marginal social cost of generating a kilowatt of electricity is $0.10 and the marginal private cost is $0.08, what is the marginal external cost?
$0.18
$0.10
$0.08
$0.02
$0.80
When a person receives a flu vaccination, the ________ is the additional benefit the person receives from getting the shot.
marginal private benefit
marginal external benefit
marginal social benefit
marginal social cost
marginal external cost
If the marginal private benefit of attending college for Shelly is $40,000 and the marginal external benefit is $15,000, she will attend college if the cost of attendance is no more than
$55,000.
$45,000
$40,000
$25,000
$15,000
If a government action is designed to achieve efficiency, then the action must have the market produce the amount of output so that the
marginal private cost equals the marginal private benefit.
marginal social cost equals the marginal social benefit.
marginal external cost equals the marginal external benefit.
marginal private cost equals the tax.
marginal social benefit exceeds the marginal social cost by as much as possible.
If all education in the United States were provided by private, tuition-charging schools,
too much education would be consumed.
too little education would be consumed.
the efficient level of education would be provided.
the government would provide both students and schools with vouchers.
education would no longer have an external benefit.
A good or service with a positive externality is one which (Choose 2)
everyone wants to have access to.
is produced in the social interest.
the marginal social benefit exceeds the marginal private benefit.
there will be overproduction of the good.
there will be underproduction of the good.
