Txst Econ 2314 exam with correct answers 2024

Not all welfare changes are associated with ______________ _________________ correct answers monetary transactions Person A --- Affects ---> Person B No money transfer correct answers An negative externality arises Which of the following is an example of a positive externality? a) air pollution b) a nice garden in front of your neighbor's house c) a person throwing garbage in a public park d) a noisy neighbor holding a party next to your door correct answers b) a nice garden in front of your neighbor's house - A harmful effect caused by the economic activity on a third party - Bystanders are not compensated for their loss correct answers Negative externality An ______________ arises when a person engages in an activity that influences the well-being of a bystander and yet neither pays nor receives any compensation for that effect correct answers externality - Benefit enjoyed by a third party as a result of an economic activity - Bystanders do not pay for their welfare gain from the externality correct answers Positive externality A harmful effect caused by the economic activity on a third party correct answers Negative externality Bystanders are not compensated for their loss correct answers Negative externality Benefit enjoyed by a third party as a result of an economic activity correct answers Positive externality Bystanders do not pay for their welfare gain from the externality correct answers Positive externality Consumption vs Production externality: correct answers An externality can arise from both the consumption of a good and production of a good When an individual's consumption increases or reduces the well-being of others who are not compensated by the individual correct answers Consumption externality