Which of These Statements Is TRUE in the Case of Externalities

question 123

Multiple Choice

Which of these statements is TRUE in the case of externalities?
I. In the case of externalities, prices do not reflect the true cost or benefit of the product.
II. In the case of externalities, prices sometimes send the wrong signals about a market.
III. Externalities discourage new producers from entering the industry since the price always remains about the efficient price.

• A) I and II only
• B) I and III only
• C) II and III only
• D) I, II, and III

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Definitions:

Diversification

The process of adding variety through including diverse elements, often used in the context of investing, economies, or in social and cultural settings.

Traditional Values

Beliefs, moral codes, and customs passed down from generation to generation within a culture or society.

Anti-Immigrant Sentiment

A negative bias or prejudice against immigrants, often manifesting in discriminatory attitudes or policies.

Anti-Affirmative Action

Opposition to policies or measures that aim to improve opportunities for historically socio-politically disadvantaged groups.