Mmicroeconomics qustions?

Question

If a coal-powered electrical generator discharges smoke into the air and causes uncompensated costs and discomfort to residents of a town, this situation is an example of a(n) ______.

quasi-public good

external cost

external benefit

specific tax

When individuals take external costs and benefits into account ______.

there are no external costs

they internalize the externality

the government needs to intervene in the market

the market will not reach an efficient solution

Which of the following is usually associated with a positive externality?

smoking cigarettes

purchasing a new CD

innovation in the semiconductor industry

all of the above

Answer 1

external cost

they internalize the externality

innovation in the semiconductor industry

Answer 2

I am an economics major, who needs to be tested. Here is what I have with analysis, please read it:

1. If a coal-powered electrical generator discharges smoke into the air and causes uncompensated costs and discomfort to residents of a town, this situation is an example of a(n) ______.

    A. quasi-public good: No because it is not available to public and has nothing to do with smoke.

    B. external cost: YES because the smoke unaccountably hurts people who do not pay for the good.

    C. external benefit: No for the opposite reason of B, the smoke doesn't help everyone.

    D. specific tax: No, the situation doesn't involve a tax.

    2. When individuals take external costs and benefits into account ______.

    A. there are no external costs: No, you do not know the value of the costs and benefits, so you aren't given enough information to determine this.

    B. they internalize the externality: Yes, the people are applying situations that apply to a whole and internalize them to apply to them as individuals. (this means that they are accounting for externalities/the effects of a good)

    C. the government needs to intervene in the market: No, This is unknown, in fact the market may be in equilibrium, which would mean the government does not need to intervene, who knows.

    D. the market will not reach an efficient solution: No, again we are not given information on the efficiency of the market so we don't know.

    3. Which of the following is usually associated with a positive externality?

    A. smoking cigarettes: No, second hand smoke causes unfavorable consequences to people that do not purchase the good.

    B. purchasing a new CD: No, there is no likely positive externality or positive effect for the general public who does not purchase the CD.

    C. innovation in the semiconductor industry: Yes, this could benefit people outside of the semiconductor industry so it is a Positive Externality.

    D. all of the above: No for reasons above.