An Externality Occurs When the Activity of One Entity Directly

question 31

Multiple Choice

An externality occurs when the activity of one entity directly affects the welfare of another that is transmitted by market prices.

• A)True
• B)False
• C)Uncertain

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Definitions:

Rainwater

Water precipitated from clouds in the form of rain, often considered as a natural source of relatively clean water.

Acidic

A description for substances with a pH less than 7, indicating a higher concentration of hydrogen ions (H+) than water.

Hydrogen Ion

A positively charged ion (H+) formed when a hydrogen atom loses its electron.

Bufferin

A brand of aspirin that contains a buffering agent to prevent stomach irritation.