. Externalities. Answer true or false, and give a brief explanation (one sentence only). a. Pollution is a negative externality. b. The regional job creation impact of opening a new hotel is an example of an externality. c. Externalities are a form of market failure only if they are negative externalities. d. When there is a positive externality, one way to improve social welfare is to subsidize the good. e. The marginal social cost includes the marginal costs of production incurred by the firms producing the good. f. If the social cost of an additional (marginal) unit is higher than the social benefit, then society would be better off if that extra unit were produced.

. Externalities. Answer true or false, and give a brief explanation (one sentence only). a. Pollution is a negative externality. b. The regional job creation impact of opening a new hotel is an example of an externality. c. Externalities are a form of market failure only if they are negative externalities. d. When there is a positive externality, one way to improve social welfare is to subsidize the good. e. The marginal social cost includes the marginal costs of production incurred by the firms producing the good. f. If the social cost of an additional (marginal) unit is higher than the social benefit, then society would be better off if that extra unit were produced.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Which of the following is an example of an activity generating a positive externality? O A. You buy a new car and then find $5,000 in the door panel. OB. Your next-door neighbor mows the lawn at 6 am. C. Your next-door neighbor installs a bat house and the bats eat mosquitoes. D. After Joe buys health insurance, he decides to quit smoking.
#8. A party ends up spreading the coronavirus. Is that an externality? a. Yes, it is a negative externality b. Yes, it is a positive externality c. No, it is not an externality
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When does a subsidy that benefits consumers result in a more efficient allocation of a resource? A when the good being produced or consumed is not scarce B when the good being produced or consumed generates a negative externality when the good being produced or consumed generates a positive externality D when the equilibrium price of the good is one that consumers don't like
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Lucia is waiting in line to receive a free t-shirt at a charity event. Because the shirts are free, there are many people in line, and a long wait time is expected. Consider the following sentence: By waiting in line for the shirt Lucia will miss an appointment to tutor an economics student, for which she would have been paid $30. Which basic concept of individual choice does this sentence best illustrate? A. Externalities are a shortcoming of the market. B. Many decisions are made on the margin. C. People usually exploit opportunities to make themselves better off. D. Opportunity costs and money costs (price) are related but are not always exactly the same.
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