The term external to the exchange. a) private costs b) externality c) market failure d) social costs refers to a market exchange that affects a third party who is outside or

Classify the source of market failure in each case listed. Market Failure Market Power Externality A manufacturing plant dumps chemical waste into a nearby river, poisoning the water supply for a small town downstream.       A single public utilities company is responsible for supplying electricity for an entire state. As a result, the utilities company can set the price of electricity.

The supply and demand conditions facing a firm that makes widgets and generates a negative externality by dumping a highly toxic sludge in a nearby river is given in the table below.   Price Quantity Demanded Quantity Supplied without Paying Social Costs Quantity Supplied after Paying Social Costs 100 0 120 75 80 10 100 50 55 30 90 30 40 55 85 25 30 80 80 20 20 100 65 15       The equilibrium price and quantity when social costs are taken into account are Question 3 options:   Price = $55; Quantity 30   Price = $40; Quantity 55   Price = $30; Quantity 20   Price = $30; Quantity 80

The tragedy of the commons is the idea that:        society has a tendency to overuse and thus abuse common resources.        total external costs in society far outweigh total external benefits.        matter can be transformed to other matter or into energy but can never vanish.        crime rates typically are higher in public places than where property is privately owned.