An externality arises when a person engages in an activity that influences the well-being of
a. buyers in the market for that activity and yet neither pays nor receives any compensation for that effect.
b. sellers in the market for that activity and yet neither pays nor receives any compensation for that effect.
c. bystanders in the market for that activity and yet neither pays nor receives any compensation for that effect.
d. Both (a) and (b) are correct.
c
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In a closed economy:
A) consumption is equal to zero. B) investment is equal to zero. C) government spending is equal to zero. D) net exports is equal to zero. In a closed economy, without the government, the consumption expenditure equals $5,000 and the investment expenditure equals $2,000.
In the United States the system most generally used for assigning tasks and distributing benefits
A) employs continuing bids and offers among individuals. B) operates without the use of money prices. C) presupposes shifting and uncertain property rights or "rules of the game." D) takes the place of the supply-and-demand process. E) was designed by the authors of the Federal Constitution.
If 50 percent of the population receives 20 percent of the total income, it can be represented on the Lorenz curve by:
a. a point below the line of income equality. b. a line below the line of income equality. c. a point on the line of income equality. d. a line intersecting the line of income equality from below. e. a point above the line of income equality.
When private ownership rights are well-defined and enforced, owners of physical assets and resources
a. have no incentive to consider the desires of others. b. incur the opportunity cost of ignoring the wishes of others. c. are not responsible if the use of their assets impose harm on others. d. have little incentive to take care of their assets.