Lesson 2.8.2
2.8.2 Positive and negative externalities in production and consumption Quiz: OCR Economics, Unit 2
20 questions
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Lesson 2.8.2, Positive and negative externalities in production and consumption: 20 multiple choice questions for the OCR Economics (H460), Unit 2: The role of markets, written with Revision Ninja.
Host it live on the board and students join with a game code on their own devices, or revise alone with Free Play. The answers are revealed in the game.
The 20 questions
-
What term describes a cost or benefit imposed on an uninvolved third party?
- Internal economy
- Market power
- Public good
- Externality
-
Which formula correctly calculates the Marginal Social Cost of production?
- MPC + MEC
- MPB - MEC
- MPC - MEC
- MPB + MEB
-
Which mathematical condition defines a negative externality in production?
- MSB > MPB
- MSC < MPC
- MSB < MPB
- MSC > MPC
-
Which relationship exists in a market with a positive consumption externality?
- MSC > MPC
- MSC < MPC
- MSB < MPB
- MSB > MPB
-
At what level of output is social efficiency or allocative optimum achieved?
- MPB = MPC
- MSB = MSC
- MSC = MPB
- MEC = MEB
-
What is a good called that yields positive consumption externalities and is underconsumed?
- Demerit good
- Public good
- Merit good
- Inferior good
-
What type of good creates negative consumption externalities and tends to be overconsumed?
- Merit good
- Demerit good
- Normal good
- Private good
-
On a standard externality diagram, where does the deadweight welfare loss triangle point?
- Towards social optimum
- Towards market equilibrium
- Towards origin
- Away from optimum
-
A chemical plant dumps toxic waste into a local river. What market failure does this cause?
- Positive production externality
- Negative production externality
- Positive consumption externality
- Negative consumption externality
-
An individual receives a flu vaccine, reducing disease spread to colleagues. What type of externality is this?
- Negative consumption externality
- Positive production externality
- Positive consumption externality
- Negative production externality
-
If MPC is £40 and MSC is £65, what is the Marginal External Cost?
- £65
- £105
- £25
- £40
-
Without government intervention, how does free market output compare to socially optimal output for polluting goods?
- Outputs are equal
- Market output higher
- Market output zero
- Market output lower
-
In an unregulated market for university education, how will output compare to the social optimum?
- Underproduced
- Overproduced
- Socially optimal
- Maximised
-
A government levies an indirect tax equal to the MEC. What happens to market output?
- Falls to optimum
- Rises to optimum
- Remains unchanged
- Falls to zero
-
A technology company provides free coding training to staff who later join rival firms. This is a:
- Negative production externality
- Positive production externality
- Positive consumption externality
- Negative consumption externality
-
Someone smokes a cigarette in a crowded room, exposing non-smokers to smoke. This represents a:
- Positive consumption externality
- Negative consumption externality
- Positive production externality
- Negative production externality
-
How can clearly defined property rights resolve market failure caused by river pollution?
- Increases deadweight loss
- Shifts MSB right
- Internalises the externality
- Eliminates private costs
-
How do tradeable pollution permits help correct market failure for heavy industrial polluters?
- Eliminates social costs
- Lowers social benefits
- Raises private costs
- Reduces private benefits
-
Why do consumers overconsume demerit goods like alcohol in a free market?
- Overestimating external costs
- Underestimating private costs
- Underestimating social benefits
- Overestimating private costs
-
Overproduction is 10 units and Marginal External Cost is £6. What is the welfare loss triangle value?
- £30
- £3.33
- £16
- £60
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