Quiz TW9 EMMW
Understanding Externalities Quiz
Test your knowledge about externalities and government intervention in the market system with our engaging quiz! Explore key concepts related to positive and negative externalities, market failures, and the role of the government in addressing these issues.
- 8 knowledge-based questions
- Learn about economic principles
- Perfect for students and teachers alike
Which of the following statements is true about externalities?
When externalities exist, resources are allocated efficiently
When positive externalities exist, efficiency is improved by taxing the product
From society's point of view, the output of goods for which a positive externality exists is too low
The price system overproduces goods with positive externalities
From an economic standpoint, government intervention is justified
When the private sector is larger than public sector.
Because the government will encourage the production of private goods.
Because the government can increase the level of market power of private businesses.
When the market mechanism fails to achieve the optimal mix of output.
Government regulation may negatively affect businesses in the following ways by
Increasing input costs
Increasing profits
Lowering consumer prices
All of the above
The role of government in a market system
Does not exist
Is restricted to establishing property rights
Includes improving situations that would otherwise result in a market failure
Includes improving on situations that would otherwise result in a government failure
A government might tax a good that creates negative externalities in order to try to:
Increase price and consumption of the good to provide firms with extra revenue
Make the information avaliable more asymmetric
Decrease demand for the good and thus increase the consumer surplus
Decrease consumption of the good and thus reduce the triangle of welfare loss
Market failure results in a misallocation of resources. In some cases, this can be corrected by the government:
Restricting the manufacture of goods that generate positive externalities
Providing public goods
Subsidising all loss-making firms
Placing a tax on merit goods
__________ goods are goods that are considered __________ for consumers but which are_________ by the market. One important reason for overprovision is that the good may have __________ consumption externalities, thus the market ________ resources in its production.
Excise; desirable; underproduced; positive; overallocates
Demerit; desirable; underproduced; positive; underallocates
Normal; needs; undervalued, elastic; frees
Demerit; undesirable; overproduced; negative; overallocates
{"name":"Quiz TW9 EMMW", "url":"https://www.quiz-maker.com/QPREVIEW","txt":"Test your knowledge about externalities and government intervention in the market system with our engaging quiz! Explore key concepts related to positive and negative externalities, market failures, and the role of the government in addressing these issues.8 knowledge-based questionsLearn about economic principlesPerfect for students and teachers alike","img":"https:/images/course6.png"}