External Costs Can Drive a Wedge Between the ?_______ and the _________

question 24

Multiple Choice

External costs can drive a wedge between the ?_______ and the _________ resulting in a market failure.

• A) private marginal WTP curve; social marginal WTP curve
• B) market demand curve; social marginal WTP curve
• C) market supply curve; social marginal costs
• D) None of the choices are correct.

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Definitions:

Yield Curve

A graphical representation of the interest rates on debt for a range of maturities.

Market Risk Premium

The extra return over the risk-free rate that investors require to compensate them for the risk of holding a market portfolio.

Required Return

The minimum rate of return on an investment that investors expect or require to compensate for risks taken.

Beta

A measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole.