An Example of an Externality Occurs When a Chemical Factory

question 39

Multiple Choice

An example of an externality occurs when a chemical factory

• A) overworks its employees.
• B) produces fertilisers that kill plants rather than feed them.
• C) produces fertilisers that do not help plants grow.
• D) is producing ethanol and dumps waste in a river upstream from a popular fishing spot.

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Definitions:

Long-run Equilibrium

A state in an economy or market where all factors of production are fully utilized, and all prices and quantities have adjusted so that aggregate supply equals aggregate demand.

Inflation Expectations

Consumers' and investors' predictions about future inflation rates, which can influence economic decisions and actual inflation through their impact on wages, prices, and interest rates.

Short-run Phillips Curve

A graphical representation showing an inverse relationship between the rate of inflation and the rate of unemployment in an economy over the short-term.

Short-run Phillips Curve

A curve that illustrates an inverse relationship between the rate of inflation and the rate of unemployment for a given period, assuming other factors remain constant.