An Example of the Way That Externalities Distort the Allocation

question 62

Multiple Choice

An example of the way that externalities distort the allocation of resources is

• A) positive economic surplus.
• B) positive externalities only.
• C) negative externalities only.
• D) negative economic surplus.
• E) both positive externalities and negative externalities.

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Definitions:

Taxi Medallion

A licensure medallion required for a taxi to operate legally in many cities, often representing a significant cost for taxi drivers and companies.

Missed Opportunity

A situation where a potential benefit or advantageous action is not taken, leading to a lost possibility.

Rent Controls

Government-imposed limits on the amount landlords can charge for leasing residential properties to ensure housing affordability.

Property Taxes

Taxes paid by property owners based on the assessed value of their property, commonly used to fund local public services and infrastructure.