An Externality

question 258

Multiple Choice

An externality

• A)results in an equilibrium that does not maximize the total benefits to society.
• B)causes demand to exceed supply.
• C)strengthens the role of the "invisible hand" in the marketplace.
• D)affects buyers but not sellers.

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Definitions:

Relevance

A fundamental quality of information that makes it useful for decision-making, ensuring that the information provided has the capacity to influence the decisions of its users.

Timely Basis

The practice of completing or delivering work within an agreed or expected period.

Price-Earnings Ratio

A valuation metric for stocks, calculated by dividing the market price per share by the earnings per share (EPS).

Investors' Expectations

The anticipations or beliefs that investors hold regarding future performance, earnings, and growth of a company or market.