Question : 48) When there a positive externality, A) the private benefit received : 1387487

48) When there is a positive externality,

A) the private benefit received by consumers is greater than the external benefit.

B) the social benefit received by consumers is greater than the private benefit.

C) the private benefit received by consumers is greater than the private cost.

D) the private benefit received by consumers is greater than the social benefit.

49) When production generates a negative externality, the true cost of production is the

A) private cost of production.

B) public cost of production.

C) social cost of production.

D) average cost of production.

50) If the social cost of producing a good or service exceeds the private cost,

A) a positive externality exists.

B) the sum of consumer surplus and producer surplus is maximized.

C) the market achieves economic efficiency.

D) a negative externality exists.

51) The cost borne by a producer in the production of a good or service is called

A) private cost.

B) public cost.

C) social cost.

D) internal cost.

52) If the social benefit of consuming a good or a service exceeds the private benefit

A) a negative externality exists.

B) the market achieves economic efficiency.

C) a positive externality exists.

D) the sum of consumer surplus and producer surplus is maximized.

53) An external cost is created when you

A) graduate from college.

B) buy flowers for your mother on Mother’s Day.

C) litter on the side of the road.

D) buy a sandwich for lunch.

54) When there is an externality in a market,

A) the externality will move the market to an economically efficient equilibrium.

B) the externality will cause the market price to be less than or greater than the equilibrium price.

C) the government should use price controls to enable the market to reach equilibrium.

D) government intervention may increase economic efficiency.

55) The social cost of cutting trees for firewood in a government forest is

A) the increased likelihood of flooding as more trees are cut.

B) the increased likelihood of flooding as more trees are cut plus the private cost of cutting the trees.

C) opportunity cost to the individual of cutting the wood.

D) the marginal costs of cutting the last tree.

56) Assume that emissions from electric utilities contribute to pollution in the form of acid rain. Which of the following describes how this affects the market for electricity?

A) The equilibrium in the market is not efficient; the marginal benefit from electricity is greater than the marginal social cost.

B) A deadweight loss occurs; at equilibrium the additional social cost of production is greater than the additional benefit to consumers.

C) The equilibrium in the market is not efficient; because of the cost of the acid rain, economic efficiency would be greater if more electricity were produced.

D) The equilibrium in the market is not efficient; consumer surplus is equal to producer surplus.

57) Medical research that ends in a cure for a serious disease produces positive externalities. What is the impact of this positive externality on economic efficiency?

A) At equilibrium, less than the economically efficient quantity of medical research is produced.

B) A deadweight loss occurs because at equilibrium the marginal social cost of medical research is greater than the marginal social benefit.

C) At equilibrium, more than the economically efficient quantity of medical research is produced.

D) A deadweight loss occurs because at equilibrium the marginal social cost equals the marginal social benefit.