Refer to exhibit 31 5 if a positive externality

155. Refer to Exhibit 31-5. If a positive externality exists, then curve __________ represents the marginal
social benefit curve and the area __________ represents the market failure.
a. 2; BDC
b. 1; ABC
c. 3; ABC
d. 2; ABC
e. 1; BDC
ANS: A PTS: 1 DIF: Difficulty: Moderate
NAT: BUSPROG: Analytic LOC: DISC: Markets, market failure, and externalities
KEY: Bloom's: Application
156. Refer to Exhibit 31-5. If a positive externality exists, then the external benefits associated with the
positive externality equal the distance between points __________, and the market output is
__________.
PTS: 1 DIF: Difficulty: Moderate
NAT: BUSPROG: Analytic LOC: DISC: Markets, market failure, and externalities
KEY: Bloom's: Application
157. Refer to Exhibit 31-5. If a positive externality exists, then curve 1 represents the __________, curve 2
represents the __________, curve 3 represents the __________ and Q
1
represents the __________.
PTS: 1 DIF: Difficulty: Moderate
NAT: BUSPROG: Analytic LOC: DISC: Markets, market failure, and externalities

KEY: Bloom's: Application
158. Refer to Exhibit 31-5. If a positive externality exists, then the external benefits associated with the
positive externality equal the distance between points ____________ and the socially optimal output is
PTS: 1 DIF: Difficulty: Moderate
NAT: BUSPROG: Analytic LOC: DISC: Markets, market failure, and externalities
KEY: Bloom's: Application
159. Refer to Exhibit 31-5. If a positive externality exists, then the external benefits associated with the
positive externality equal
a. P
4
- P
2
.
b. P
3
- P
1
.
c. P
2
- P
1
.
d. P
3
- P
2
.
e. a and b
ANS: E PTS: 1 DIF: Difficulty: Moderate
NAT: BUSPROG: Analytic LOC: DISC: Markets, market failure, and externalities
KEY: Bloom's: Application
160. Refer to Exhibit 31-5. If a positive externality exists, then the market ____________ output by the
amount ________________.
PTS: 1 DIF: Difficulty: Moderate
NAT: BUSPROG: Analytic LOC: DISC: Markets, market failure, and externalities
KEY: Bloom's: Application