A situation in which a benefit or a cost associated with an economic activity spills over to third parties is called
A. a public good.
B. a merit good.
C. the free-rider problem.
D. an externality.
Answer: D
You might also like to view...
Diminishing marginal utility means that
A) Ralph will enjoy his second hamburger less than the first. B) the total utility from one hamburger exceeds the total utility from two hamburgers. C) the price of two hamburgers is twice the price of one. D) beyond a certain point, total utility decreases as income rises.
Suppose workers become pessimistic about their future employment, which causes them to save more and spend less. If the economy is on the intermediate range of the aggregate supply curve, then:
a. both real GDP and the price level will fall. b. real GDP will fall and the price level will rise. c. real GDP will rise and the price level will fall. d. both real GDP and the price level will rise.
If the number of employed people decreases and the average hours worked per week increases, then
Honey producers provide a positive externality to orchards because
a. the honey producers get more honey. b. the orchard owner frequently gets stung by the honey producer's bees. c. the orchard owner does not have to purchase bees to pollinate his flowers. d. the honey producers have to rent access to the orchard grounds.