A negative externality occurs when: MCQ with Answer and Explanation

Question

Share Report Error

A negative externality occurs when:

A. private benefit equals social benefit

B. private cost exceeds social cost

C. social cost exceeds private cost

D. social benefit exceeds private benefit

Answer: Option C

Solution (By JKSSB Mock Tests)

A negative externality arises when social cost exceeds private cost, e.g. pollution.

This question belongs to: Economy GK Economy Set 1

Request complete Subject PDF

Discuss this Question (0)

No comments yet. Be the first to start the discussion!

Practice More Economy Set 1 Questions

Question #1

Deadweight loss in economics refers to:

A. loss of revenue to the government

B. loss of total welfare due to market inefficiency

C. loss suffered by a monopolist

D. depreciation of capital

View Answer & Solution Discuss

Get Complete Subject PDF for Economy GK

Correct Answer: Option B

Explanation:
Deadweight loss is the loss of economic welfare due to inefficiency such as taxes, price controls or monopoly.

This question belongs to: Economy GK Economy Set 1

Question #2

The term 'Financial Inclusion' primarily aims at:

A. Restricting credit to priority sectors

B. Ensuring access to financial services for all sections of society at affordable cost

C. Providing banking services only to high-income groups

D. Increasing interest rates for small borrowers

View Answer & Solution Discuss

Get Complete Subject PDF for Economy GK

Correct Answer: Option B

Explanation:
Financial inclusion seeks to ensure that individuals and businesses, especially the underserved, have access to useful and affordable financial products and services.

This question belongs to: Economy GK Economy Set 1

Question #3

The 'substitution effect' of a price change always leads consumers to buy:

A. more of the good whose relative price has fallen

B. the same amount

C. only inferior goods

D. less of the good whose relative price has fallen

View Answer & Solution Discuss

Get Complete Subject PDF for Economy GK

Correct Answer: Option A

Explanation:
The substitution effect always causes consumers to buy more of the relatively cheaper good.

This question belongs to: Economy GK Economy Set 1

Explore All Economy Set 1 MCQs