What will arise when negative externalities are present in a market?
a) Government will regulate the externalities in the market.
b) Private costs will be greater than social costs.
c) The market will not be able to reach any equilibrium situation.
d) Social costs will be greater than private costs.
Ans: d) Social costs will be greater than private costs.
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In the scenario above, if both firms cheat on the agreement, producing more than the agreed amount, then
A) each firm makes zero economic profit. B) the outcome is identical to a monopoly. C) the industry's economic profit is the maximum profit that can be made by the duopoly. D) each firm makes a greater economic profit than it would make if it complied with the agreement.
Albert, Betty, Christine and David are all very good students. When they hold their study sessions, they often discuss very difficult concepts in great detail. Christine's roommate, Elizabeth, who takes completely different classes, still learns from the discussions of the others. This is the case of a(n) ____, which ____ a ____
a. public good; benefits; third party b. externality; imposes a cost on; free rider c. market failure; results from; third party d. free rider; benefits from; third party e. Externalities; benefits; third party