When there is a negative externality, the private market produces [ Select ] [“less“, “more“] than what is socially optimal because it ignores the [ Select ] [“external cost“, “external benefit“, “social cost“, “private cost“] . In order to bring the market closer to the socially optimal outcome, the government could impose a [ Select ] [“subsidy“, “tax“, “tariff“] on the market.

Flag question: Question 2Question 23 pts

When there is a positive externality, the private market produces [ Select ] [“less“, “more“] than what is socially optimal because it ignores the [ Select ] [“external cost“, “external benefit“, “social beneift“, “private benefit“] . In order to bring the market closer to the socially optimal outcome, the government could impose a [ Select ] [“subsidy“, “tax“, “tariff“] on the market.

Flag question: Question 3Question 32 pts

The ideal tax is equal to the amount of the [ Select ] [“social cost“, “external cost“, “private cost“] .

The ideal subsidy is equal to the amount of the [ Select ] [“social benefit“, “external benefit“, “private benefit“] .

Flag question: Question 4Question 43 pts

When a positive externality is present, the [ Select ] [“social cost“, “external cost“, “external benefit“] must be added to the private benefit to find the [ Select ] [“external cost“, “social cost“, “private benefit“, “social benefit“] . The socially optimal quantity and price can be found where the private cost curve crosses the [ Select ] [“private cost“, “external cost“, “social cost“, “social benefit“] curve.

Flag question: Question 5Question 53 pts

When a negative externality is present, the [ Select ] [“social cost“, “external cost“, “external benefit“] must be added to the private cost to find the [ Select ] [“external cost“, “social cost“, “private benefit“, “social benefit“] . The socially optimal quantity and price can be found where the private benefit curve crosses the [ Select ] [“private cost“, “external cost“, “social cost“, “social benefit“] curve.

Flag question: Question 6Question 61 pts

An external cost occurs when producing or consuming a good or service imposes a [ Select ] [“benefit“, “cost“] (negative effect) upon a third party.

Flag question: Question 7Question 71 pts

An external benefit occurs when producing or consuming a good or service imposes a [ Select ] [“benefit“, “cost“] (positive effect) upon a third party.