Question 1
What is meant by market failure?
A.
Social cost exceeds private cost. B.
Affected without being part of transaction. C.
Where MSB = MSC. D.
Private market produces wrong quantity.
Question 2
What is meant by third party?
A.
Benefit of consuming one extra unit. B.
Marginal social cost. C.
Affected without being part of transaction. D.
Marginal social benefit.
Question 3
What is meant by marginal cost (mc)?
A.
Cost of producing one extra unit. B.
Private market produces wrong quantity. C.
Social cost exceeds private cost. D.
Marginal social cost.
Question 4
Social optimum occurs where:
A.
Price = 0 B.
Private cost = 0 C.
MSB = MSC D.
S only matters
Question 5
What is meant by socially optimum?
A.
Private market produces wrong quantity. B.
Marginal social cost. C.
Where MSB = MSC. D.
When social costs/benefits differ from private costs/benefits.
Question 6
What is meant by externality?
A.
Benefit of consuming one extra unit. B.
When social costs/benefits differ from private costs/benefits. C.
Cost of producing one extra unit. D.
Marginal social cost.
Question 7
What is meant by positive externality?
A.
Private market produces wrong quantity. B.
Marginal social cost. C.
Affected without being part of transaction. D.
Social benefit exceeds private benefit.
Question 8
What is meant by marginal benefit (mb)?
A.
Benefit of consuming one extra unit. B.
Marginal social benefit. C.
Social cost exceeds private cost. D.
Marginal social cost.
Question 9
Negative externalities lead to:
A.
No government role B.
Underproduction C.
Overproduction D.
Perfect efficiency
Question 10
What is meant by msb?
A.
Social cost exceeds private cost. B.
Cost of producing one extra unit. C.
Social benefit exceeds private benefit. D.
Marginal social benefit.
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