Consider a market with a negative externality. The market will tend to ________ the good because the market participants tend to ignore the ________ of their decision.Group of answer choicesoverproduce; external benefitunderproduce; external benefitunderproduce; external costoverproduce; external costoverproduce; internal benefit

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.

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.

When externalities are present, the socially optimal outcome occurs where the _____ benefit equals the _____ cost.Question 3Answera.marginal external; marginal externalb.marginal social; marginal socialc.total social; total sociald.total external; total external

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

The costs or benefits of a market activity that affect a third party are calledGroup of answer choices