When a Policy Succeeds in Giving Buyers and Sellers in a Market

question 61

Multiple Choice

When a policy succeeds in giving buyers and sellers in a market an incentive to take into account the external effects of their actions, the policy is said to

• A)equalize private value and private cost.
• B)equalize private cost and external cost.
• C)externalize the actions of the buyers and sellers.
• D)internalize the externality.

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Definitions:

Birth Rate

The number of live births per thousand people in a population over a specific period.

Economic Liability

A legal obligation or debt that results in a financial burden or disadvantage to an individual, business, or organization.

Postindustrial Period

A stage in societal development characterized by the shift from manufacturing-based economies to those dominated by service-oriented, information-based activities.

Demographic Transition

A theory describing the transition from high birth and death rates to lower birth and death rates as a country develops from a pre-industrial to an industrialized economic system.