Externalities Are a Measure of the Divergence Between Social Costs

question 119

True/False

Externalities are a measure of the divergence between social costs and private costs.

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Definitions:

Specialization

The process by which individuals, businesses, or countries focus on producing a limited range of goods or services to gain greater efficiency and productivity.

Trade Barriers

Measures such as tariffs, quotas, and regulations implemented by governments to control international trade and protect domestic industries.

NAFTA

The North American Free Trade Agreement, a treaty between the United States, Canada, and Mexico that eliminated most tariffs and trade barriers between the countries.

Comparative Advantage

The ability of an entity to produce a good or service at a lower opportunity cost than others.