An Externality Is

question 111

Multiple Choice

An externality is

• A)an additional cost imposed by the government on producers.
• B)an additional gain received by consumers from decisions made by the government.
• C)a cost or a benefit from an action that falls on someone other than the person or firm choosing the action.
• D)a marginal social cost.
• E)the additional amount consumers have to pay to consume an additional amount of a good or service.

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Definitions:

Pure Monopoly

A market structure where a single seller dominates the market with no close substitutes for the product or service offered.

Oligopoly

A market structure characterized by a few firms dominating the market.

Mutual Interdependence

A situation in an economy where the actions of one participant significantly affect the outcomes of other participants, commonly seen in oligopolistic markets.

Monopolistic Competition

A market structure characterized by many firms offering products or services that are similar but not perfect substitutes, leading to a degree of market power.