Private Costs and Benefits, Externalities and Social Costs and Benefits Quiz by Shubhrata Shrestha | Jun 27, 2025 | 0 comments Private Costs and Benefits, Externalities and Social Costs and Benefits Quiz 1. What is the formula for Marginal Social Cost (MSC)? A. MPB + MEB B. MPC + MEC C. MSC - MPC D. MSB - MPB None 2. A moral hazard occurs when: A. One party takes risks knowing others bear the cost B. Marginal benefit equals marginal cost C. Public goods are underproduced D. Social cost is less than private cost None 3. Which of the following is a positive externality in consumption? A. Noise from a nightclub B. Water pollution C. Vaccination against disease D. Illegal dumping None 4. Social efficiency is achieved when: A. MPB = MPC B. Externalities are ignored C. MSC = MPC D. MSB = MSC None 5. What happens if a positive externality is not internalized? A. The good is underproduced B. The good is banned C. The good is overproduced D. Marginal cost equals marginal benefit None 6. Which of these would most likely reduce a negative externality? A. Price ceiling B. Government failure C. Taxation D. Subsidy for consumption None 7. Which of the following is NOT an external cost? A. Factory's electricity bill B. Air pollution C. Noise from traffic D. Water contamination None 8. Deadweight welfare loss is caused by: A. Internalizing externalities B. MSC ≠ MSB C. Perfect competition D. All costs being private None 9. An example of asymmetric information is: A. A subsidy for public transport B. A negative externality from coal mining C. A used car seller hiding a defect D. A Pigouvian tax None 10. Which of the following best illustrates a negative production externality? A. Flu shot benefits society B. A firm uses solar panels C. Students sharing notes D. Factory polluting a nearby river None Time's up Submit a Comment Cancel replyYour email address will not be published. Required fields are marked *Comment * Name * Email * Website Save my name, email, and website in this browser for the next time I comment. Δ
