Practice Questions
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What is the impact of negative externalities in consumption on overall social welfare?
Negative externalities happen when someone’s actions hurt others. Other options are incorrect because Some might think that more goods mean more happi...
Which of the following policies is most likely to be used to correct negative externalities in consumption, such as excessive consumption of alcohol?
A tax on alcohol sales makes it more expensive to buy. Other options are incorrect because Giving away public goods for free does not directly address...
How do negative externalities, such as pollution, affect consumer behavior according to behavioral economics?
Negative externalities like pollution can cause problems in the market. Other options are incorrect because Some might think that pollution makes peop...
How do negative externalities in consumption lead to market failure?
Negative externalities happen when people consume things that harm others, like smoking. Other options are incorrect because Some might think that neg...
Which of the following best exemplifies a negative externality in consumption related to cigarette smoking?
When people smoke, others nearby can breathe in the smoke too. Other options are incorrect because Some might think that higher tax money from cigaret...
Which of the following is an example of a negative externality in consumption?
When someone smokes in public, it can harm the health of people nearby. Other options are incorrect because Offering discounts is a way to attract cus...
Which of the following best describes a negative externality in consumption?
A negative externality happens when someone consumes a good and it causes problems for others. Other options are incorrect because This option suggest...
Which of the following is an example of a negative externality in consumption that leads to market failure?
When someone smokes in public, it can harm the health of people nearby. Other options are incorrect because Buying a new car creates jobs, which is a ...
Arrange the following steps in the correct order to illustrate the impact of negative externalities in consumption related to tree planting by homeowners: A) Neighbors experience increased costs due to fallen leaves, B) Homeowners plant trees, C) Market equilibrium quantity of trees is higher than the socially optimal quantity, D) Potential government interventions are considered to address the issue.
First, homeowners plant trees. Other options are incorrect because This option suggests that the market quantity is considered before neighbors are af...
A local coffee shop offers a discount for customers who bring their own cups, encouraging them to reduce waste. However, some customers leave their used cups on the sidewalk, creating litter that others must clean up. Which of the following best describes the externality created by this situation?
The discount encourages people to use their own cups, but it also leads to litter. Other options are incorrect because Some might think the discount i...
When homeowners plant trees, the fallen leaves can create a __________ externality, imposing cleanup costs on neighbors that are not reflected in the market price of the trees.
This is a negative externality. Other options are incorrect because Some might think this is positive, but positive means it helps others; Zero sugges...
How can government intervention effectively address the negative externality caused by homeowners planting trees?
A tax on tree planting makes homeowners think about the costs of fallen leaves. Other options are incorrect because Giving money to plant more trees m...
A homeowner plants a tree in their yard, but the fallen leaves create a mess for their neighbors to clean up. Which of the following best classifies this situation in terms of externalities?
This situation shows a negative externality because the homeowner enjoys the tree, but the neighbors suffer from the mess. Other options are incorrect...
Homeowners planting trees is to neighbors dealing with fallen leaves as factories polluting air is to ___?
When factories pollute the air, it affects everyone nearby. Other options are incorrect because This suggests that pollution is good for factories; Th...
What is the underlying cause of the cleanup costs incurred by neighbors due to homeowners planting trees?
When homeowners plant trees, they drop leaves. Other options are incorrect because Some might think shade from trees helps neighbors save on energy bi...
How can negative externalities in consumption, like tree leaves falling on neighbors' property, lead to market failure?
When people consume things like trees, they might not think about the extra costs to others. Other options are incorrect because Some might think that...
Which of the following statements accurately describe the implications of negative externalities in consumption, particularly in the context of homeowners planting trees? Select all that apply.
All the statements misunderstand how negative externalities work. Other options are incorrect because This suggests homeowners ignore their neighbors'...
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