Which of the Following Is an Example of an External

question 147

Multiple Choice

Which of the following is an example of an external benefit?

• A) More people start to ride the bus because they become more public‐spirited and, as a result, air pollution is reduced.
• B) Firms are able to reduce their costs of production by using a more efficient technology.
• C) The federal government spends a million dollars on improving national parks.
• D) A firm has just gotten permission to open a landfill on property that is adjacent to your home.

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Definitions:

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.

Oligopoly

An economic setup in which a handful of companies possess substantial influence on determining market prices and competitive dynamics.