book 4: externalises

Question 1

externalises are _____ costs or ______ that a ____ party incurs from another party’s _______ or _______.

Answer 1

externalises are indirect costs or benefits that a third party incurs from another party’s consumption or production.

Question 2

for positive externalises, ________ benefits exceed ______ benefits.

Answer 2

for positive externalises, social benefits exceed private benefits.

Question 3

market _________ is when the ________ mechanism leads to the _______ of resources.

Answer 3

market failure is when the market mechanism leads to the misallocation of resources.

Question 4

free riders are _______ who _______ without paying.

Answer 4

free riders are people who benefit without paying.

Question 5

government ______ is the ______ of the government in the market to influence _____ and ______.

Answer 5

government intervention is the involvement of the government in the market to influence demand and supply.

Question 6

__________ efficiency is the optimal distribution of goods and services among all buyers.

Answer 6

allocative efficiency is the optimal distribution of goods and services among all buyers.

Question 7

___________ efficiency is the optimal distribution of resources in production.

Answer 7

productive efficiency is the optimal distribution of resources in production.