Microeconomics

Table of Contents

1. Topic pack - Microeconomics - introduction
2. 1.1 Competitive Markets: Demand and Supply
3. 1.1 Competitive Markets: Demand and Supply - notes
4. 1.1 Competitive markets - questions
5. 1.1 Competitive markets - simulations and activities
6. 1.2 Elasticities
7. 1.2 Elasticities - notes
8. Section 1.2 Elasticities - questions
9. Section 1.2 Elasticities - simulations and activities
10. 1.3 Government intervention
11. 1.3 Government Intervention - notes
12. 1.3 Government intervention - questions
13. 1.3 Government intervention - simulations and activities
14. 1.4 Market failure
15. 1.4 Market failure - notes
16. Section 1.4 Market failure - questions
    1. Market failure - short answer
    2. Externalities - short answer
    3. Externalities & allocative efficiency - short answer
    4. Externalities - self-test questions
    5. Public goods - short answer
    6. Merit goods - short answer
    7. Demerit goods - short answer
    8. Types of goods - self-test questions
    9. Government responses - short answer
    10. Common access resources - activities
    11. Overexploitation - questions
    12. Sustainability - report
    13. Plastic bags - carrying the weight of the environment?
    14. Running cars on biofuels can be unethical
    15. Cement - the hidden polluter?
    16. African roses - a sign of change
    17. Congestion charging
    18. Putting a price on carbon
    19. Power bills to soar in 'green reforms'
    20. Beyond Kyoto
    21. Economic growth cannot continue
    22. The rush to find Jade
    23. Chopstick tax
    24. Taxing light bulbs - that's a bright idea
    25. Trading pig excrement
    26. Congestion pricing
    27. Packaging tax
    28. Airport expansion plans
17. Section 1.4 Market failure - simulations and activities
18. 1.5 Theory of the firm
19. 1.5 Theory of the firm - notes (HL only)
20. Section 1.5 Theory of the firm - questions
21. Section 1.5 Theory of the firm - simulations and activities
22. Print View

Externalities - self-test questions

1

Externalities What type of externality is evident from the picture below? a) Negative consumption externality b) Positive consumption externality c) Negative production externality d) Positive production externality Please select an answerNo, that's not right. This pollution is a production externality. No, that's not right. This pollution is a production externality.Yes, that's correct. This pollution is an external cost as the cost is borne by people other than the factory polluting. This means that pollution is a negative production externality.No, that's not right. A positive production externality would be something that has an external benefit. Pollution is an external cost and so is a negative externality.

2

Externalities What type of externality is evident from the picture below? a) Negative consumption externality b) Positive consumption externality c) Negative production externality d) Positive production externality Please select an answerNo, that's not right. A negative consumption externality would be one that led to external costs. This attractive sculpture in someone's garden will have external benefits as other can also enjoy it. Yes, that's correct. This attractive sculpture in someone's garden will have external benefits as other can also enjoy it.No, that's not right. Someone has bought this sculpture and hung it in their garden which allows others to enjoy it. It therefore offers external benefits arising from consumption.No, that's not right. Someone has bought this sculpture and hung it in their garden which allows others to enjoy it. It therefore offers external benefits arising from consumption.

3

Externalities What type of externality is evident from the picture below? a) Negative consumption externality b) Positive consumption externality c) Negative production externality d) Positive production externality Please select an answerYes, that's correct. A negative consumption externality is one that leads to external costs. Smoking is a consumption activity and results in costs being imposed on those other than just the people smoking (health costs etc). It is therefore a negative consumption externality.No, that's not right. A positive consumption externality is one that leads to external benefits. Smoking is a consumption activity that results in external costs (health costs etc).No, that's not right. Smoking is a consumption activity and so is a consumption externality.No, that's not right. Smoking is a consumption activity and so is a consumption externality.

4

Externalities What type of externality is evident from the picture below? a) Negative consumption externality b) Positive consumption externality c) Negative production externality d) Positive production externality Please select an answer No, that's not right. A negative consumption externality is one that leads to external costs. The external costs here are arising from a production activity (production and storage of gas).No, that's not right. A positive consumption externality is one that leads to external benefits. This image shows external costs arising from a production activity (production and storage of gas).Yes, that's correct. The gasholder leads to an external cost for this house (and people passing by) and arises from a production activity.No, that's not right. The gasholder leads to an external cost for this house (and people passing by) and arises from a production activity.

5

Externalities What type of externality is evident from the picture below? a) Negative consumption externality b) Positive consumption externality c) Negative production externality d) Positive production externality Please select an answerYes, that's correct. A negative consumption externality is one that leads to external costs. The external costs here are arising from the consumption activity of buying and using cars for transport.No, that's not right. This is a consumption externality, but a positive consumption externality is one that leads to external benefits. This image shows external costs arising from the dumping of a car.No, that's not right. Though there may have negative consumption externalities arising from the production of the car in the first place, these external costs have arisen from the consumption and dumping of a car.No, that's not right. The image shows external costs arising from consumption of a car and the car subsequently being dumped.

6

Externalities The image below shows syringes used for vaccination. What type of externality is evident from this? a) Negative consumption externality b) Positive consumption externality c) Negative production externality d) Positive production externality Please select an answer No, that's not right. A negative consumption externality is one that leads to external costs. Vaccination will lead to external benefits rather than costs. Yes, that's correct. Vaccination will lead to external benefits as it will protect other from catching diseases.No, that's not right. Vaccination is a consumption activity and so any externalities resulting from it will be consumption externalities.No, that's not right. Vaccination is a consumption activity and so any externalities resulting from it will be consumption externalities.