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When production of a good creates an external benefit:
  1. There is a negative externality. 
  2. It results in the tragedy of the commons. 
  3. There is a positive externality. 
  4. A club good is being produced. 
  5. Too much of the good is being produced. 

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Chika Ilonah
Chika IlonahLv10
4 Oct 2020

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Related questions

11. An external benefit(positive externality) implies that private markets will provide ____ and an external cost(negative externality) implies that private markets will provide _____ of the good (relative to the social optimum).  

a. too much; too much

b. too little; too little

c. too much; too little

d. too little; too much

Define an externality. Give three examples of things others did that imposed a negative externality on you.

- please note that using up a limited good does not create an externality. If someone grabs the last parking spot before you get there, they didn't create an externality. There is just a shortage of the good, so you didn't get one. Nothing external about that.

10. Fill in the blank. When a negative externality is present in producing a good or service, ___________ of the good or service will be produced at market equilibrium.

 

 a. too much

 b. too little

 c. the optimal quantity

d. none

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