Externalities exist when the actions of one agent
A. benefit the agent committing the action.
B. hurt the agent committing the action.
C. benefit or hurt another agent who is a part of the exchange relationship.
D. benefit or hurt another agent who is not part of the exchange relationship.
Answer: D
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Which of the following is not an incentive bureaucrats have to increase the size of their budgets?
a. They can increase their income by having a higher budget. b. Increased budgets mean more power and prestige. c. Higher budgets are necessary to maximize scale efficiencies. d. A nice working environment is positively correlated with a higher budget.
The sales of shoes that include shoelaces is a tie-in sale that most likely
A) greatly increases the shoe producer's profit. B) increases transactions costs. C) increases efficiency. D) None of the above.
Short-term bonds are generally
a. less risky than long-term bonds and so they feature higher interest rates. b. less risky than long-term bonds and so they feature lower interest rates. c. more risky than long-term bonds and so they feature higher interest rates. d. more risky than long-term bonds and so they feature lower interest rates.
Which of the following is a business comparing when it analyzes the cost of buying wood desks versus the cost of buying metal desks:
A. Excess demand B. Relative price C. Inflated price D. Incentives