Externalities

question 28

Multiple Choice

Externalities:

• A) are not reflected in market prices, so they can be a source of economic inefficiency.
• B) do become reflected in market prices, so they can be a source of economic inefficiency.
• C) are not reflected in market prices, so they do not adversely affect economic efficiency.
• D) do become reflected in market prices, so they do not adversely affect economic efficiency.
• E) may or may not become reflected in market prices, but do not have an impact on economic efficiency in either event.

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Definitions:

Slice of Pizza

A single triangular piece cut from a round pizza, typically topped with cheese, tomato sauce, and various toppings.

Economic Thinking

Economic thinking involves analyzing the production, distribution, and consumption of goods and services by applying principles such as scarcity, choice, and cost-benefit analysis.

Making Choices

The process of deciding between two or more alternatives, often evaluated in terms of costs and benefits.

Margin

The difference between the selling price of a product and its cost of production or buying price, often expressed as a percentage of the selling price.