An externality is A. a cost paid for by the producer of a good or service. B. a benefit realized by the purchaser of a good or service. C. anything that is external or not relevant to the production of a good or service. D. a benefit or cost experienced by someone who is not a producer or consumer of a good or service. A. It refers to the inability of the market to allocate resources efficiently up to the point where marginal social benefit equals marginal social cost. B. It refers to the inability of the market to allocate resources efficiently up to the point where marginal social benefit equals marginal private cost. C. It refers to a situation where an entire sector of the economy (for example, the airline industry) collapses because of some unforeseen event. D. It refers to a breakdown in a market economy because of widespread corruption in government.
Added by Tom-S W.
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An externality is an effect of a transaction that impacts third parties who are not directly involved in the transaction. Show more…
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An externality is Group of answer choices the total cost to society of producing an additional unit of a good or service. a problem intrinsic to public goods: The good or service is so costly that its provision generally does not depend on whether or not any single person pays. a cost or benefit resulting from some activity or transaction that is imposed or bestowed on parties outside the activity or transaction. the amount a consumer pays to consume an additional amount of a particular good.
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A positive externality or spillover benefit (additional social benefit) occurs when: a. Product differentiation increases the variety of products available to consumers. b. Firms earn positive economic profits. c. The benefits associated with a product exceed those accruing to people who consume it. d. A firm does not bear all of the costs of producing a good or service.
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With the help of the graph, it is observed that the marginal private benefit of the good is $95 and, due to a positive externality, the marginal benefit to society is $125. In this case, the marginal external benefit created by the positive externality is $. In the graph, represents a deadweight loss. The deadweight loss the foregone benefit to society of the externality. Positive externality will occur when A. the marginal social benefit is equal to marginal private benefit B. the marginal social benefit is equal to deadweight loss C. the marginal social benefit is greater than the marginal cost to produce at the market equilibrium D. the marginal social benefit is equal to marginal social cost to produce at the market equilibrium Which of the following statements is true regarding pecuniary externalities? A. It is a branch of the negative externality. B. It causes market inefficiencies. C. It leads to wrong equilibrium quantities. D. It affects other people only through market price.
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