Externalities by James DeNicco

About the Lecture

The lecture Externalities by James DeNicco is from the course Principles of Microeconomics (EN). It contains the following chapters:

A Closer Look at Externalities
Public Policy towards Externalities
Private Solutions and the Coase Theorem
Recap

Included Quiz Questions

If the impact of an externality is harmful for the third party, it is called a ________ externality and the market equilibrium quantity produced is ________ the socially optimal level.

negative ; more than
negative ; less than
positive ; more than
positive ; less than

When the government levies a ________ on a good equal to the external cost associated with the good’s production, it ________ the price paid by consumers and makes the market outcome ________ efficient.

tax ; increases ; more
subsidy ; increases ; more
tax ; increases ; less
subsidy ; increases ; less

Which of the following statements is true according to the Coase Therom?

If private parties can bargain without cost over the allocation of resources, they can solve the problem of externalities on their own.
If private parties cannot bargain without cost over the allocation of resources, they can solve the problem of externalities on their own.
The government is never necessary to solve the problems of externalities.
The government is always necessary to solve the problems of externalities.