An Externality Arises When a Person Engages in an Activity

question 464

Multiple Choice

An externality arises when a person engages in an activity that influences the well-being of

• A)buyers in the market for that activity and yet neither pays nor receives any compensation for that effect.
• B)sellers in the market for that activity and yet neither pays nor receives any compensation for that effect.
• C)bystanders in the market for that activity and yet neither pays nor receives any compensation for that effect.
• D)Both (a) and (b) are correct.

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Definitions:

Set of Equations

A collection of equations designed to be solved together, where each equation relates different variables or constants to one another.

Accurate

The quality of being correct or precise, often used in the context of numerical or factual information.

Cent

A monetary unit in various countries, equal to one-hundredth of a base currency.

Verify

To check or test the accuracy or correctness of something.