An Externality Is Said to Exist When

question 73

Multiple Choice

An externality is said to exist when:

• A)the market allocation of resources is not Pareto- optimal.
• B)an agent's consumption affects the prices paid by the agent.
• C)an economic agent directly affects another economic agent or agents.
• D)an economic activity indirectly affects others through prices.

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Definitions:

Invested Assets

Assets consisting of money or other items of value that are put into financial instruments or projects with the expectation of achieving income or profit.

Return On Investment

A performance measure used to evaluate the efficiency of an investment by comparing the amount of return relative to the investment’s cost.

Sales To Investment

A ratio that measures the return on investment by comparing the sales generated to the amount of investment made.

Investment Turnover

A measure of the activity or liquidity of an investment portfolio, indicating how frequently assets within the portfolio are bought and sold.