The Process of Providing Incentives So That Externalities Are Taken

question 160

Multiple Choice

The process of providing incentives so that externalities are taken into account internally by firms or by consumers is called

• A)socializing the externalities.
• B)contingent-valuing the externalities.
• C)privatizing the externalities.
• D)internalizing the externalities.
• E)externalizing the externalities.

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Definitions:

Monopolist

A firm that is the only producer of a good that has no close substitutes.

Linear Demand Curve

A graphical representation showing how the quantity demanded of a good or service varies with its price, typically depicted as a straight line on a graph.

Consumer Surplus

The difference between the maximum price a consumer is willing to pay for a good or service and the actual price they pay, reflecting consumer benefit.

Market Price

The present rate at which a product or service can be purchased or sold on the market.