AP®︎ Microeconomics: Topic 6.2 Practice Test
Prepare for your quiz, test, or the AP exam with focused practice questions on Topic 6.2 of AP Microeconomics – Externalities.
Questions List
Topic 6.2
Question 1 Easy
This question tests the following: POL-3.A
What is an externality?
What You’re Being Tested On:
Explore the learning objectives taken directly from the College Board’s AP® Microeconomics Curriculum. Ensure you’re prepared for the exact topics covered on the AP® exam, in-class tests, and quizzes, and gain confidence in your mastery of the material.
Topic 6.2: Externalities
Learning Objective: POL-3.A
a. Define externalities. b. Explain (using graphs where appropriate) how in the presence of externalities, private markets do not take into consideration social costs or social benefits.
Essential Knowledge: POL-3.A.1
The socially optimal quantity of a good occurs where the marginal social benefit of consuming the last unit equals the marginal social cost of producing that last unit, thus maximizing total economic surplus.
Essential Knowledge: POL-3.A.2
Externalities are either positive or negative and arise from lack of well-defined property rights and/or high transaction costs.
Essential Knowledge: POL-3.A.3
In the presence of externalities, rational agents respond to private costs and benefits and not to external costs and benefits.
Essential Knowledge: POL-3.A.4
Rational agents have the incentive to free ride when a good is non-excludable.
Learning Objective: POL-3.B
Explain (using graphs where appropriate) how public policies address positive or negative externalities.
Essential Knowledge: POL-3.B.1
Policies that address positive or negative externalities include taxes/subsidies, environmental regulation, public provision, the assignment of property rights, and the reassignment of property rights through private transactions.
