The Problem with Externalities Is Essentially One of

question 98

Multiple Choice

The problem with externalities is essentially one of

• A)a discrepancy between private and social costs.
• B)the failure of the market to solve social problems.
• C)asymmetric information.
• D)the inability of a firm in an industry characterized by increasing returns to scale to make positive profits if it sets price equal to marginal cost.
• E)a failure of the market to generate socially valued outcomes.

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Definitions:

Reciprocal Determinism

A concept in psychology that explains how an individual's behavior both influences and is influenced by personal factors and the social environment.

Environmental Influences

External factors that affect an individual’s development and behavior, including physical, social, and cultural factors.

Spotlight Effect

The notion that individuals believe their appearance and actions are under closer watch by others than reality suggests.

Reciprocal Determinism

A concept in psychology suggesting that an individual's behavior is both influenced by and influences one's personal factors and the environment.