In general, an externality is created when
A) people are affected (other than by price) by a transaction which they were not part of.
B) firms produce a product of low quality and consumers don't like it.
C) firms have to pay for pollution the environment.
D) the government subsidizes education.
A
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If Slick Shades, a sunglasses manufacturer, contracts with an outside supplier to manufacture the lenses for the sunglasses, this is an example of ________.
A) outsourcing B) divestiture C) backward integration D) forward integration
A firm's demand for labor depends on, in part, the demand for the firm's product. To summarize this idea, economists say that the demand for labor is:
a. derived demand. b. marginal demand. c. secondary demand. d. monopsonistic demand.
According to the Taylor Rule, if the inflation rate is 3 percent and the GDP gap is 2 percent, what does the federal funds rate target equal?
A) 8.5 percent B) 5.5 percent C) 3.5 percent D) 6.5 percent
Which of the following can reduce the level of long-run economic growth?
A. A decrease in deficit spending by the government. B. An increase in government safety regulations. C. An increase in the savings rate. D. Government enforced property rights.