Quiz Ch10 - Quiz Ch10 Multiple Choice Identify the letter...

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Quiz Ch10 Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. __C__ 1. When externalities exist, buyers and sellers a. neglect the external effects of their actions, but the market equilibrium is still efficient. b. do not neglect the external effects of their actions, and the market equilibrium is efficient. c. neglect the external effects of their actions, and the market equilibrium is not efficient. (This is the correct answer) d. do not neglect the external effects of their actions, and the market equilibrium is not efficient. __D__ 2. If an externality is present in a market, economic efficiency may be enhanced by a. increased competition. b. weakening property rights. c. better informed market participants. d. government intervention. (This is the correct answer) __C__ 3. Suppose that cookie producers create a positive externality equal to $2 per dozen. What is the relationship between the equilibrium quantity and the socially optimal quantity of cookies to be produced? a.
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This note was uploaded on 03/19/2010 for the course ECON 201020-ECO taught by Professor Michaelwenz during the Spring '10 term at Northeastern.

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Quiz Ch10 - Quiz Ch10 Multiple Choice Identify the letter...

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