Question: Which of the following activities create a negative externality?

Answer: keeping a junked car parked in your front lawn

Question: When there is a negative externality, the private cost of production ________ the social cost of production.

Answer: is less than

Question: Private costs

Answer: are borne by producers of a good while social costs are borne by society at large.

Question: When production generates a negative externality, the true cost of production is the

Answer: social cost of production

Question: An externality occurs when ________.

Answer: an economic activity affects third parties not engaged in the activity.

Question: If the production of a good involves negative externalities, ________.

Answer: the optimal price of the good is higher than the price charged in the market

Question: Conceptually, the efficient level of carbon emissions is the level for which

Answer: the marginal benefit of reducing carbon emissions is equal to the marginal cost of reducing carbon emissions.

Question: The marginal social cost curve ________ when production involves negative externalities.

Answer: lies above the social curve

Question: When a negative externality exists, the private market produces

Answer: more than the economically efficient output level.

Question: A market demand curve reflects the

Answer: private benefits of consuming a product.