An externality is a situation in which
A. there are no social costs.
B. private costs diverge from social costs.
C. internal costs diverge from private costs.
D. the cost borne by the consumer is greater than the monetary price.
Answer: B
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Differentiate between taste-based discrimination and statistical discrimination
What will be an ideal response?
Inflation tends to ________ during a business cycle expansion and ________ during a business cycle recession
A) increase; decrease B) decrease; increase C) increase; increase further D) decrease; decrease further
After 2 years of operation, the workers in XYZ Co become more adept because of their repeating work. As a result, the average cost of production is lowered due to
A) economies of scale. B) increasing returns to scale. C) increasing marginal returns. D) learning by doing.
Bad risks may be the most willing to pay high interest rates and thus get loans. This describes an example of
a. symmetrical information b. adverse selection c. natural selection d. moral hazard e. the winner's curse