Ch.10 Externalities

In a market economy, government intervention may

In the absence of externalities, the "invisible hand" leads a market to maximize

Market failure can be caused by

An externality is an example of

When an externality is present, the market equilibrium is

Private markets fail to account for externalities because

negative externality

When the social cost curve is above a product's supply curve,

positive externalities result in

Technology spillover is what type of externality?

Patents do not

Assume the socially optimal quantity of education will exceed the market equilibrium quantity of education. what externality will that result in?

a more educated population tends to result in lower crime rates. What externality does that result in?

A command-and-control policy is another term for a

The tax on cigarettes is an example of

- can be used to internalize a negative externality. - imposed on sellers shifts the supply curve to the left. - imposed on buyers shifts the demand curve to the left.

- are widely viewed as a cost-effective way to reduce pollution. - have helped reduce carbon emissions in Canada. - have helped reduce sulfur dioxide emissions in the United States.

What can keep private parties from solving externality problems?

What states, under certain circumstances, government intervention is not needed to reach efficient outcomes when an externality is present.