Week 3 Chapter Review

Question 1 of 3

1. Question

What is a negative externality?

Question 2 of 3

2. Question

How are the free rider problem and the common pool resource problem (also known as “the tragedy of the commons”) related to basic problems of externalities?

Question 3 of 3

3. Question

Which of the following is NOT an example of a negative externality?

Companies that spill oil into the ocean do not bear the full costs of the resulting harm to the marine environment, which include everything from degraded commercial fisheries to reduced endangered sea turtle populations.
Commuters generate emissions of air pollution, which lowers the ambient quality of the air in areas they pass through and causes health problems for other people.
Developers who build houses in bucolic exurban settings cause habitat fragmentation and biodiversity loss, in soliciting a cost on the public at large.
A homeowner builds a chicken coop in the yard of her residential neighborhood, which results in depressed property value. The homeowner plans to give the eggs away to neighbors.
All of the above responses are examples of negative externalities.
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Week 3 Chapter Review

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