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:

Comparison Person

An individual used as a benchmark to evaluate one's own situation, achievements, or performance in social comparison theory.

Need for Achievement

A psychological trait that drives individuals to succeed, accomplish challenging tasks, and set high standards for themselves.

Needs for Affiliation

The desire to form connections with others and maintain social relationships.

Salespersons

Individuals who sell products or services, often directly to customers, and are skilled in negotiation, communication, and persuasion.