. Externalities. Answer true or false, and give a brief explanation (one sentence only). a. Pollution is a negative externality. b. The regional job creation impact of opening a new hotel is an example of an externality. c. Externalities are a form of market failure only if they are negative externalities. d. When there is a positive externality, one way to improve social welfare is to subsidize the good. e. The marginal social cost includes the marginal costs of production incurred by the firms producing the good. f. If the social cost of an additional (marginal) unit is higher than the social benefit, then society would be better off if that extra unit were produced.

. Externalities. Answer true or false, and give a brief explanation (one sentence only). a. Pollution is a negative externality. b. The regional job creation impact of opening a new hotel is an example of an externality. c. Externalities are a form of market failure only if they are negative externalities. d. When there is a positive externality, one way to improve social welfare is to subsidize the good. e. The marginal social cost includes the marginal costs of production incurred by the firms producing the good. f. If the social cost of an additional (marginal) unit is higher than the social benefit, then society would be better off if that extra unit were produced.

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter10: Externalities

Section: Chapter Questions

Problem 3PA

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