An externality is defined as
A. an opportunity cost that is not considered, which causes inefficiency.
B. a social cost that affects parties external to a transaction.
C. a transaction that imposes a loss on one of the parties involved.
D. a “cost of doing business” that cannot be allocated to any particular good.
E. the increase in cost associated with increased production.
Answer: B
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The intent of parity pricing in the farm industry is to
a. drive inefficient farmers out of business b. allow a market to reach its equilibrium price c. provide only low-income farmers with government aid d. increase farm productivity with new technologies e. maintain farmers' purchasing power relative to nonfarmers
Which of the following is an example of excess supply:
A. Price = $500, demand = 500, supply = 300 B. Price = $700, demand = 300, supply = 500 C. Price = $600, demand = 400, supply = 400 D. Price = $400, demand = 600, supply = 200
Which of the following is affected by changes in interest rates and, as a result, impacts aggregate demand?
A. Business investment projects D. The value of the dollar C. Consumption of durable goods D. All of the above
The classical economists believed that if saving exceeded investment, the _____________.
Fill in the blank(s) with the appropriate word(s).