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Education › Economics › Public Economics › Government Policies On Externalities

Government Policies on Externalities Quiz

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| By Thames

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Quizzes Created: 8156 | Total Attempts: 9,588,805

| Attempts: 11 | Questions: 8 | Updated: Nov 12, 2025

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Question 1 / 9

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1. What is an externality?

A cost or benefit incurred by a third party

A government regulation

A type of tax

A market failure

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Government Policies On Externalities Quiz - Quiz

2.

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2. Which of the following is a positive externality?

Pollution from a factory

Education

Traffic congestion

Overfishing

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3. What is a common government response to negative externalities?

Subsidies

Taxes

Regulations

All of the above

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4. Which policy is often used to encourage positive externalities?

Tax incentives

Fines

Bans

Price controls

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5. What is the Coase Theorem?

A theory about government intervention

A principle stating that private parties can solve externalities through negotiation

A method for calculating taxes

A law of supply and demand

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6. Which of the following is an example of a negative externality?

A well-maintained park

A factory emitting smoke

A public library

A community garden

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7. What is a Pigovian tax?

A tax on income

A tax intended to correct the negative effects of externalities

A tax on luxury goods

A tax on sales

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8. Which of the following is NOT a method to internalize externalities?

Government regulation

Marketable permits

Subsidies

Price ceilings

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All (8)
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What is an externality?

Which of the following is a positive externality?

What is a common government response to negative externalities?

Which policy is often used to encourage positive externalities?

What is the Coase Theorem?

Which of the following is an example of a negative externality?

What is a Pigovian tax?

Which of the following is NOT a method to internalize externalities?

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