If an Externality Is Present in a Market, Economic Efficiency

question 129

Multiple Choice

If an externality is present in a market, economic efficiency may be enhanced by

• A)increased competition.
• B)weakening property rights.
• C)better informed market participants.
• D)government intervention.

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Definitions:

Income

The total amount of money received by an individual or generated by an entity, typically on a regular basis, from various sources such as wages, investments, or business ventures.

Demand Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, indicating the sensitivity of consumers to price changes.

Price Fall

A reduction in the market price of a good or service, which can influence consumer behavior and economic conditions.

Demand Function

A mathematical expression that shows the relationship between the quantity demanded of a good and its price, holding other factors constant.