ECON 301
University of British Columbia (UBC )
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CHAPTER 34-Externalities QUESTIONS WITH VERIFIED ANSWERS
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---11juni 20212020/2021A+
- CHAPTER 34-Externalities 
TRUE/FALSE 
1. A trade between two people is an example of an externality. 
ANS: F DIF: 1 
2. The only known way to eliminate externalities is through taxes or subsidies. 
ANS: F DIF: 1 
3. The efficient amount of air pollution is in general independent of whether polluters or pollutees pay to 
reduce pollution. 
ANS: F DIF: 1 
4. A Pigouvian tax on pollution is designed to collect enough revenue to pay for pollution detection by 
the government. 
ANS: F DIF: 1 
5. If t...
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