Which type of the market failure exists when the effect of one party's economic activities on another party is not taken into account by the price system?
A. Imperfect competition
B. Externalities
C. Public goods
D. Imperfect information
Answer: B
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What country is the largest holder of foreign debt in the world?
A. U.S.A B. China C. Germany D. United Kingdom E. Russia
Which of the following is not an example of an externality?
a. Drunk drivers raise everyone's auto insurance premiums. b. The price of lumber increases as lumberjacks' wages increase. c. The neighbor's beautiful front yard increases your home value. d. Someone drives a car that emits thick black smoke. e. People who live near a bakery enjoy the smell of freshly baked bread.
Spain is an importer of computer chips, taking the world price of $12 per chip as given. Suppose Spain imposes a $5 tariff on chips. As a result,
a. Spanish consumers of chips and Spanish producers of chips both gain. b. Spanish consumers of chips gain and Spanish producers of chips lose. c. Spanish consumers of chips lose and Spanish producers of chips gain. d. Spanish consumers of chips and Spanish producers of chips both lose.
If those who consumed common resources were subject to a tax that was equal to the external costs that they imposed due to the negative externality created, their demand curve would shift:
A. down and they would consume more. B. down and they would consume less. C. up and they would consume less. D. up and they would consume more.