Externalities CH 10

The private consumption of services that generate positive externalities, such as getting a college education, is usually ______ the socially optimal level of consumption.

less than

Which of the following is an example of a positive externality?

making improvements to your house (because the neighbors are able to appreciate the improvement look)

Jose owns a dog whose barking annoys Jose's neighbor Amy. Suppose that the net benefit of owning the dog is worth $400 to Jose and that Amy bears the cost of $200 from the barking. Assuming Amy has the legal right to keep Jose from having a dog, a possible private solution is that:

Jose pays Amy $350 for her inconvenience, and keeps the dog ($350 is less than the total benefits of the dog to Jose, but more than the costs to Amy)

Which of the following is an example of an externality

a student voluntarily askes a question during class

Which of the following is not a common method by which the government controls pollution?

advertising the harmful effects of pollution to encourage firms to pollute less

When Lin receives a flue vaccination, it reduces the chance of him catching the flu as well as the chance that his sister will get sick as well. his flu vaccination creates an

external benefit

Jase always texts while he drives. He is generating _____ to others.

external cost (because he is putting others at risk)

According to the Coase Theorem, private parties can negotiate to an efficient solution in the presence of externalities if...

transaction costs are low