When a market is inefficient
a) marginal social cost equals marginal social benefit
b) marginal social cost does not equal marginal social benefit
c) marginal social cost is always above marginal social benefit
d) marginal social benefit is always above marginal social cost
Unlock full course notes by signing up
When there is a negative production externality
In the presence of negative externalities, there is
The above curves are for an industry that produces an externality. The optimal price and quantity for society is _________ because this industry produces a _________ externality.
Since Mary often texts while she drives, she is generating a _______ to others, resulting in a shift of the supply curve to the ______.
Practice: Externality
The above curves are for an industry that produces an externality. What is the free market equilibrium price and quantity?
An example of a negative externality is
Externalities
Cigarette smoking creates a _____________externality.
In the diagram above, what is the producer surplus at the socially optimal output level?
When there is a negative externality due to pollution the government can intervene to
When there is a positive externality, each person has a benefit that
The private consumption of services that generate positive externalities, such as getting a college education, is usually _____ the socially optimal level of consumption.