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Theme 1 - Market Failure - Externalities 1
Quiz by Mark Seccombe
Negative externalities exist in a market for a good giving rise to a misallocation of resources. This misallocation is most likely to have resulted from
At current levels of output, the marginal social benefit of a good is greater than its marginal private benefit. As a result, there are likely to be
The diagram shows the market for a good. In the absence of government intervention in this market, a misallocation of resources is likely to occur because
Positive externalities exist when
If the firm is producing OE, there is likely to be
Market failure arises when
Positive externality goods are likely to be under-provided in a free market economy because their
Government intervention in a free market economy is most likely to improve the allocation of resources if
In the absence of government intervention in this market, a misallocation of resources is likely to occur because
Which of the policies should be adopted to maximise economic welfare of the community?
Which one of the following statements about a positive externality good is true?
At current levels of output, the MSC>MPC. Also, MSB>MPB. As a result, there will probably be