Question

18. If a negative externality results from the mowing of lawns, the marginal cost of lawn mowing as seen by lawn mowing firms:

a. does not include the marginal external cost.

b. equals the marginal social cost.

c. includes the marginal external cost.

d. exceeds the marginal social cost.

19. Which of the following is not a negative externality?

a. air pollution.

b. high oil prices.

c. clear-cutting in forests.

d. litter.

32. Public goods are provided by the government because the

a. private sector is typically unable to earn profits from their production.

b. private sector lacks sufficient financial resources.

c. private sector lacks the knowledge of how to produce them.

d. government is more technologically efficient at producing these goods than firms in the private sector.

Answer 1

Answer 1: A

EXPLAINATION:

If a negative externality results from the mowing of lawns, the marginal cost of lawn mowing as seen by lawn mowing firms does not include the marginal external cost.Rather they only include its material and social cost.

Answer 2: High oil prices

EXPLAINATION: Rather high oil price will lead to reduction in use of private vehicles hence lower level of air and noise pollution.

Answer 3: A

EXPLAINATION:

Public goods are provided by the government because the private sector is typically unable to earn profits from their production.Hence Private sectors will not produce such goods and services leads to scarcity and problems in the economy.