A Situation in Which a Benefit or a Cost Associated

question 349

Multiple Choice

A situation in which a benefit or a cost associated with an economic activity spills over to third parties is called

• A) a public good.
• B) a merit good.
• C) an externality.
• D) the free-rider problem.

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Definitions:

Government Restrictions

Regulations imposed by authorities to control or limit certain activities, behaviors, or operations.

Exclusive Right

A legal provision giving the holder the sole permission to produce, use, or sell a particular commodity or concept.

Cement

A binding agent used in construction that sets, hardens, and adheres to other materials, commonly used to bind sand and gravel in concrete.

Downward Sloping

A term typically used to describe a demand curve that shows the inverse relationship between the price of a product and the quantity demanded.