Two types of private solutions to the problem of externalities areGroup of answer choicescharities and subsidies.taxes and subsidies.charities and the Golden Rule.the Golden Rule and taxes

Externalities are minimized ifGroup of answer choicesthe government owns all of the productive resources.there are no private goods.private property rights are well established.there are no public goods.there are no free-riders.

If the social benefit of consuming a good or a service exceeds the private benefit,Group of answer choicesthe market achieves economic efficiency.a negative externality exists.a positive externality exists.the sum of consumer surplus and producer surplus is maximised.

In the case of a negative                externality, there’s                of a good, resulting in a                to society, which might be remedied by imposing a                on the good.Group of answer choicesconsumption; overconsumption; loss; taxproduction; overconsumption; gain; taxproduction; overproduction; loss; subsidyconsumption; underconsumption; loss; tax

Which of the following is true of a negative externality?Group of answer choicesThe government can use subsidies to encourage firms to internalize the externality.The government must take over the production of this good so that the externality can be internalized.Some benefits accrue to a third party.Its existence always requires corrective measures by the government.Some costs are borne by a third party.

Private decisions about consumption of common resources and production of public goods usually lead to anGroup of answer choicesinefficient allocation of resources and no external effects.efficient allocation of resources and external effects.inefficient allocation of resources and external effects.efficient allocation of resources and no external effects.