What Makes an Externality Positive Rather Than Negative

question 151

Multiple Choice

What makes an externality positive rather than negative?

• A) The deadweight loss is greater than zero,not less.
• B) The socially optimal quantity exchanged is less,not greater,than at market equilibrium.
• C) The externality affects the demand curve rather than the supply curve.
• D) The externality benefits third parties rather than harming them.
• E) The externality becomes internalized without government action.

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Definitions:

Berlin Wall

A fortified barrier that divided East and West Berlin from 1961 to 1989, symbolizing the Cold War division between the communist and non-communist blocs.

Cold War

The period of geopolitical tension between the Soviet Union and the United States and their respective allies from the end of World War II until the dissolution of the Soviet Union in 1991.

Temporary

means lasting for only a limited period of time; not permanent.