Exhibit 2A-5
-Refer to Exhibit 2A-5. Which of the following would best explain the shift from line 1 to line 2?
Definitions:
Market Demand Curve
A graphical representation showing the relationship between the price of a good and the total quantity demanded by all consumers in the market.
Positive Externality
A benefit that affects a party who did not choose to incur that benefit, often associated with public goods and services.
Free-Market Economy
An economic system where prices are determined by unrestricted competition between privately owned businesses without government intervention.
Negative Externality
A situation where a third party suffers costs or harm as a result of an economic transaction between other parties, without compensation, such as pollution from a factory affecting nearby residents.
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