Lesson 4.1.8.4
4.1.8.4 Positive and negative externalities in consumption and production Quiz: AQA Economics, Unit 1
20 questions
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Lesson 4.1.8.4, Positive and negative externalities in consumption and production: 20 multiple choice questions for the AQA Economics (7136), Unit 1: Individuals, firms, markets and market failure, written with Revision Ninja.
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The 20 questions
-
What exists when there is a divergence between private and social costs or benefits?
- Asymmetric information
- A public good
- An externality
- Government failure
-
What type of externality occurs when a factory creates uncompensated pollution affecting nearby residents?
- Negative consumption externality
- Negative production externality
- Positive production externality
- Positive consumption externality
-
Without government intervention, negative externalities of production lead to which market outcome?
- Allocative efficiency
- Over-production
- Under-production
- Market equilibrium
-
Without government intervention, positive externalities in production lead to which market outcome?
- Allocative efficiency
- Under-production
- Excess supply
- Over-production
-
Which of the following is an example of a positive externality of consumption?
- Passive smoking
- Vaccinations
- Worker training
- Industrial pollution
-
Which of the following is an example of a negative externality of production?
- Littering in parks
- In-house job training
- Factory air pollution
- Vaccination programmes
-
If private marginal cost is £4 and marginal external cost is £2, what is marginal social cost?
- £8
- £4
- £6
- £2
-
Which policy internalises a negative externality of production by increasing private costs?
- A state subsidy
- An indirect tax
- Deregulation
- Maximum price cap
-
Which policy lowers price to encourage consumption of a good generating positive externalities?
- A government subsidy
- A trade tariff
- An indirect tax
- A minimum price
-
What issue directly arises when common resources lack clearly defined property rights?
- Inflation
- Income equality
- Monopoly power
- Externalities
-
What is the primary economic purpose of issuing tradable pollution permits?
- Maximising tax revenues
- Internalising external costs
- Fixing consumer prices
- Eliminating all pollution
-
Which of the following is an example of a positive externality of production?
- Individual disease vaccination
- Driving exhaust emissions
- Neighbourhood noise pollution
- Firm-provided staff training
-
Why is it difficult for governments to set an optimal tax on negative externalities?
- High interest rates
- Excessive consumer demand
- Measuring external costs
- Scarcity of resources
-
At what point is the socially optimal level of output achieved in a market?
- MPB equals MPC
- MSB equals MSC
- MSB exceeds MSC
- MPC exceeds MSB
-
Which benefit of university education is a positive externality of consumption?
- Individual career progress
- Lower community crime
- Higher graduate tuition
- Higher personal salary
-
According to the Coase theorem, private bargaining requires well-defined what?
- Tax rates
- State subsidies
- Property rights
- Price floors
-
Which policy best corrects the under-consumption of a good with a positive externality?
- Maximum price
- Indirect tax
- Minimum price
- Per-unit subsidy
-
Which of the following is an example of a negative externality of consumption?
- Passive smoking
- Factory noise
- Industrial waste
- Crop pollination
-
What curve represents the total cost to society of producing an additional unit of a good?
- Marginal social benefit
- Marginal social cost
- Marginal external cost
- Marginal private cost
-
What market outcome occurs when a firm ignores its negative production externalities?
- Underproduction
- Productive efficiency
- Allocative efficiency
- Overproduction
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