Which term refers to a situation where an exchange between a buyer and a seller affects a third party, who is not part of the exchange?
a. Externality
b. Social cost
c. Market failure
d. Economic cost
a. Externality
An externality occurs when an exchange between a buyer and a seller affects a third party, who is not part of the exchange
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In the above figure, what is the efficient quantity of hot dogs to produce?
A) 2 thousand per day B) 4 thousand per day C) 6 thousand per day D) The efficient quantity cannot be determined without knowing the PPF for this economy.
The inflation rate measures the percentage increase in the price level from one year to the next
Indicate whether the statement is true or false
A proposal to build a dam on a wild river may look like a good idea from the cost/benefit study done by the Army Corps of Engineers, but an analysis done by the Sierra Club might suggest that the dam would be a complete waste of money. Differences in cost/benefit studies such as this are expected because:
A. at least one side is definitely making mistakes in the analysis. B. items that do not have market prices, such as the environment, are very difficult to value objectively. C. at least one side is trying to deceive the public. D. cost/benefit studies describe what people want to happen, not what will actually happen.
The Keynesian perspective focuses on the demand-side of the economy;
What will be an ideal response?