A situation in which a private cost diverges from a social cost is
A) internal costs.
B) an externality.
C) an internality.
D) a transactions cost.
Answer: B
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Which of the following would be considered an example of structural policy?
A. An attempt to reduce the government budget deficit by reducing spending. B. Provision of additional cash to the banking system. C. A reduction in income tax rates. D. A decision by a developing country to reduce government control of the economy and to become more market-oriented.
For a non-discriminating monopolist to sell one more unit, it must
A. lower the price of the last as well as all previous units produced. B. raise the price of only the last unit produced. C. lower the price of only the last unit produced. D. raise the price of the last as well as all previous units produced.
The Lucas Wedge is estimated to
A) total over $406,000 per person as a result of the slowdown in the growth rate of real GDP. B) be positive in some years and negative in others. C) be about 2 percent of real GDP per year. D) be negative due to the severe recession in 2008-2009. E) have reached about $13,000 per person in the last year.