ECONOMICS
MARKET FAILURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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When the consumption/production of a good or service has a negative impact on a third party
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When the consumption/production of a good or service has any impact on a third party
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When the consumption/production of a good or service has a positive impact on a third party
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When the consumption/production of a good or service depletes the access for a third party
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Detailed explanation-1: -A negative externality exists when the production or consumption of a product results in a cost to a third party. Air and noise pollution are commonly cited examples of negative externalities. When negative externalities are present, private markets will overproduce because the costs of production for…
Detailed explanation-2: -Negative externalities are detriments that people suffer that they do not pay for.
Detailed explanation-3: -Negative externalities of consumption come as a product of social costs, or the cost of an affected community, being more expensive than private costs. When someone consumes something that leads to a negative effect on someone else, a negative consumption externality exists.
Detailed explanation-4: -What are negative externalities? Negative externalities occur when production and/or consumption impose external costs on third parties outside of the market for which no appropriate compensation is paid. This causes social costs to exceed private costs.
Detailed explanation-5: -Negative consumption externalities When certain goods are consumed, such as demerit goods, negative effects can arise on third parties. Common example include cigarette smoking, which can create passive smoking, drinking excessive alcohol, which can spoil a night out for others, and noise pollution.