Environmental economicsOnline version Test environment risks by Laura Sanz 1 In a market characterized by externalities, the market equilibrium fails to maximize the total benefit to society as a whole. a Verdadero b Falso 2 Internet technologies are a good example of a positive externality because they create knowledge that other people can use. a Verdadero b Falso 3 Organizers of an outdoor concert in a park surrounded by residential neighborhoods are likely to consider the noise and traffic cost to residential neighborhoods when they assess the financial viability of the concert venture. a Verdadero b Falso 4 Government subsidized scholarships are an example of a government policy aimed at correcting for negative consumption externalities associated with education. a Verdadero b Falso 5 Government can internalize an externality by taxing the goods that have negative externalities, and subsidizing the goods that have positive externalities. a Verdadero b Falso 6 All goods that are socially desirable will be privately profitable. a Verdadero b Falso 7 The free-rider problem arises when the number of beneficiaries is large and exclusion of any of them is impossible. a Verdadero b Falso 8 In the Tragedy of the Commons, joint action among the individual citizens would be necessary to solve their common resource problem, if government did not intervene. a Verdadero b Falso 9 Roads can be considered either public goods or common resources, depending on how congested they are. a Verdadero b Falso 10 Private markets ensure that the air we breathe is clean and that our country is defended from foreign aggressors. a Verdadero b Falso
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