Private Individuals Acting on Their Own May Avoid the Inefficiencies

question 11

Multiple Choice

Private individuals acting on their own may avoid the inefficiencies of externalities through:

• A)establishing social conventions.
• B)bargaining between disputing parties.
• C)creating a merger of the disputing parties.
• D)all of these answers are correct.

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Definitions:

Entrepreneurial Ability

The skill to innovate, take risks, and efficiently allocate resources to create and manage a business.

Human Capital

A form of intangible capital that includes the skills and other knowledge that workers have or acquire through education and training and that yields valuable services to a firm over time.

Labor Productivity

The measure of economic output per unit of labor input, often used to gauge the efficiency of a workforce.

Savings Rate

The proportion of disposable income that is saved rather than spent on consumption.