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IB ECON - 1.4 - Externalities Quiz Flashcards | StudBud

Explore/IB ECON - 1.4 - Externalities Quiz

IB ECON - 1.4 - Externalities Quiz

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Externalities

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Questions 10

Answers

1
This graph is displaying which type of externality?
Negative consumption
Positive production
Positive consumption
Negative production
2
MPB stands for:
Missed private benefit
Mr Peanut Butter
Marginal private benefit
Marginal production benefit
3
Which of these is an example of negative production externalities?
Polluting factories
Driving your diesel car
Education
Smoking
4
What is happening in this diagram?
A tax to correct a negative production externality
A subsidy to correct a positive production externality
A subsidy to help provide public goods
A subsidy to make supply equal demand
5
What is the free-market equilibrium price in this situation?
Q*
P*
Qe
Pe
6
Welfare loss is eradicated when:
A subsidy is introduced
The equilibrium moves to the socially optimal level
Goods are outlawed with legislation
The free-market is left to do its job
7
The use of demerit goods causes:
positive consumption externalities
negative consumption externalities
positive production externalities
negative production externalities
8
An externality is when:
you harm society unknowingly
society has market failure
MSB & MSC intersect
production/consumption causes costs/benefits to 3rd parties
9
What is the socially optimum quantity?
Q*
Welfare loss
a - b
Qe
10
What type of externality is this graph showing?
Negative consumption
Positive production
Positive consumption
Positive consumption