Question

1.) I don't subscribe to Netflix, but since my roommate leaves his account logged in I can watch all I want. For me, there is a ______ externality and the real demand curve for Netflix services is to the _____ of the private demand curve.

a.) Positive; Left

b.) Positive; Right

c.) Negative; Left

d.) Negative; Right

2.) One way to fix the above problem would be to have someone

a.) Make my roommate give me some money

b.) Make the demand curve for Netflix services steeper

c.) Pay my roommate some money

d.) Shift the supply for Netflix services to the left

3.) Knowledge created through pure research is generally a

a.) club good

b.) economic bad

c.) public good

d.) private good

Answer 1

1. As roommate leaves his Netflix account logged in and you can watch all you want. Then , this shown that there is a positive externality because without paying for it ,you are getting the benefit of it. And the real demand curve for Netflix services is to the right of the private demand curve. Hence , option(B) is correct.

2. One way to fix the above problem would be to have someone pay my roommate some money i.e equal to the amount of external benefit. Hence , option(C) is correct.

3. Knowledge created through pure research is generally a private good because it is protected by patents and copyrights. Hence, option(D) is correct.