An externality exists when
A) there are private costs.
B) there are internal costs.
C) there are external costs.
D) there are opportunity costs.
Answer: C
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Keynes argued that
I. Capitalism did not always lead to full employment. II. Nominal prices were more important than relative prices. A) I only B) II only C) Both I and II D) Neither I nor II
An absence of property rights often leads to market failure. When this is the case, how does society usually solve the problem?
Which of the following cannot be determined from a nation's position relative to its production possibilities frontier?
a. whether it is producing efficiently b. whether it has unemployed resources c. the opportunity cost of each good illustrated d. the society's relative preferences regarding each good illustrated e. the price of each good illustrated
Diversification is:
A. the process by which risks are shared among many different assets or people. B. making a market more liquid by being always ready to buy or sell an asset. C. the interest rate at which one would lend if there were no risk of default. D. when a borrower fails to pay back a loan according to the agreed-upon terms.