Externalities

Question 1

Common Pool Resource

Answer 1

They are resources, typically natural resources, which are non-excludable (no one can be excluded from the use) but rivalrous in nature. Common pool resources refers to natural resources that are freely available to anyone to use, at zero price

Question 2

MSB

Answer 2

Marginal Social Benefit is the additional benefit to society from consuming one more unit of a good or service

Question 3

MSC

Answer 3

Marginal Social Cost is the additional cost to society from producing one more unit of a good or service

Question 4

Externalities

Answer 4

Externalities are unintended side effects of an economic activity that affects a third party who are not involved in the transaction and are not compensated.

Question 5

Merit Goods

Answer 5

Merit goods are underproduced or under consumed goods that are private and is a positive externalities.

Question 6

Demerit Goods

Answer 6

Demerit goods are overproduced or over consumed goods that are private and is a negative externalities.

Question 7

Market failure

Answer 7

The failure of a market is when resources are not allocated efficiently

Question 8

Production externalities

Answer 8

The cost

Question 9

Consumption externalities

Answer 9

The benefit

Question 10

Socially Optimal Output

Answer 10

Socially optimal output is when MSB = MSC