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1、Chapter10/Externalitiesv731Chapter10ExternalitiesTRUE/FALSE1.Marketssometimesfailtoallocateresourcesefficiently.ANS:TDIF:2REF:10-0NAT:AnalyticLOC:Markets,marketfailure,andexternalitiesTOP:MarketfailureMSC:Interpretive2.Whenatransactionbetweenabuyerandsellerdirectlyaffectsathirdparty,theeffectis
2、calledanexternality.ANS:TDIF:1REF:10-0NAT:AnalyticLOC:Markets,marketfailure,andexternalitiesTOP:ExternalitiesMSC:Definitional3.Buyersandsellersneglecttheexternaleffectsoftheiractionswhendecidinghowmuchtodemandorsupply.ANS:TDIF:2REF:10-0NAT:AnalyticLOC:Markets,marketfailure,andexternalitiesTOP:E
3、xternalitiesMSC:Interpretive4.Inamarketcharacterizedbyexternalities,themarketequilibriumfailstomaximizethetotalbenefittosocietyasawhole.ANS:TDIF:1REF:10-0NAT:AnalyticLOC:Markets,marketfailure,andexternalitiesTOP:ExternalitiesMSC:Definitional5.Inamarketwithpositiveexternalities,themarketequilibr
4、iumquantitymaximizesthewelfareofsocietyasawhole.ANS:FDIF:1REF:10-0NAT:AnalyticLOC:Markets,marketfailure,andexternalitiesTOP:ExternalitiesMSC:Interpretive6.Barkingdogscannotbeconsideredanexternalitybecauseexternalitiesmustbeassociatedwithsomeformofmarketexchange.ANS:FDIF:1REF:10-0NAT:AnalyticLOC
5、:Markets,marketfailure,andexternalitiesTOP:ExternalitiesMSC:Applicative7.Thesocialcostofpollutionincludestheprivatecostsoftheproducersplusthecoststothosebystandersadverselyaffectedbythepollution.ANS:TDIF:1REF:10-1NAT:AnalyticLOC:Markets,marketfailure,andexternalitiesTOP:ExternalitiesMSC:Definit
6、ional8.Organizersofanoutdoorconcertinaparksurroundedbyresidentialneighborhoodsarelikelytoconsiderthenoiseandtrafficcosttoresidentialneighborhoodswhentheyassessthefinancialviabilityoftheconcertventure.ANS:FDIF:1REF:10-1NAT:AnalyticLOC:Markets,marketfailure,andexternalitiesTOP:Negativeexternaliti
7、esMSC:Applicative9.Whenadriverentersacrowdedhighwayheincreasesthetraveltimesofallotherdriversonthehighway.Thisisanexampleofanegativeexternality.ANS:TDIF:1REF:10-0NAT:AnalyticLOC:Markets,marketfailure,andexternalitiesTOP:Externalit
