Question 1

When the production of a good generates negative externalities,________.

Accepted Answer

A)  the fixed cost of production is zero 
B)  the variable cost of production is zero 
C)  the private cost of production exceeds the social cost of production 
D)  the social cost of production exceeds the private cost of production 
A)  the fixed cost of production is zero 
B)  the variable cost of production is zero 
C)  the private cost of production exceeds the social cost of production 
D)  the social cost of production exceeds the private cost of production

Question 2

Scenario: The following figure shows the private cost and social cost of producing Good X. Firm A is the producer of Good X. The production plant and Bob's house are located next to a river. However, the plant is upstream, and Bob's house is downstream. Since production pollutes the river, Bob suffers from a negative externality.
  
-Refer to the scenario above.What is the value of the negative externality imposed on Bob when the firm produces the socially optimal quantity?

Accepted Answer

A)  (b d) e 
B)  (a c) f 
C)  d e 
D)  c f 
A)  (b d) e 
B)  (a c) f 
C)  d e 
D)  c f

Question 3

When does the marginal social cost of producing a good exceed the marginal private cost of producing it?

Accepted Answer

If the production of a good ge

When the production of a good generates negative externalities,________.

When does the marginal social cost of producing a good exceed the marginal private cost of producing it?

The Principles and Practice of Economics

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

Demand, supply, and Equilibrium

Consumers and Incentives

Sellers and Incentives

Perfect Competition and the Invisible Hand

Trade

The Government in the Economy: Taxation and Regulation

Markets for Factors of Production

Monopoly

Game Theory and Strategic Play

Oligopoly and Monopolistic Competition

Trade-Offs Involving Time and Risk

The Economics of Information

Auctions and Bargaining

Social Economics

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Exam 9: Externalities and Public Goods

When the production of a good generates negative externalities,________.

When does the marginal social cost of producing a good exceed the marginal private cost of producing it?

The Principles and Practice of Economics

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

Demand, supply, and Equilibrium

Consumers and Incentives

Sellers and Incentives

Perfect Competition and the Invisible Hand

Trade

The Government in the Economy: Taxation and Regulation

Markets for Factors of Production

Monopoly

Game Theory and Strategic Play

Oligopoly and Monopolistic Competition

Trade-Offs Involving Time and Risk

The Economics of Information

Auctions and Bargaining

Social Economics

Filters