chapter 10: externalities

which of the following statements is true regarding externalities

both negative and positive externalities lead to inefficient outcomes in markets

Markets with positive externalities do not trade the optimal quantity because:

consumers fail to consider the external benefit in their decision making process

according to the coase theorem, an externality always requires government intervention in order to internalize the externality

false

which of the following statements is true about regulating externalities

regulation is a command and control policy that can be used to deal with externalities

An externality is

the uncompensated impact of one person's actions on the well-being of a bystander

the government engages in a technology policy

to internalize the positive externality associated with technology enhancing industries

a market that generates a negative externality that has not been internalized generates equilibrium quantity that is less than the optimal quantity

true

a tax always makes a market less efficient

true