All Externalities

question 15

Multiple Choice

All externalities:

• A)are harmful to society and create costs external to the decision maker.
• B)are beneficial to society and create benefits external to the decision maker.
• C)create either a cost or benefit to a person other than the person who caused them.
• D)are addressed by the government through taxation.

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Definitions:

Liability

A legal obligation or responsibility, often involving financial debts or compensation for losses or damages.

Injured Buyer

Refers to a purchaser who has suffered harm or damage due to misrepresentation, defective goods, or breach of warranty in a transaction, and may seek legal remedy.

Open and Obvious Risks

Hazards or dangers in a particular environment that are so apparent and recognizable that they should be avoided by anyone paying reasonable attention.

Duty to Warn

a legal obligation to inform others of a risk or hazard that is not immediately apparent, to prevent harm.