When Positive Externalities Are Present in a Market

question 115

Multiple Choice

When positive externalities are present in a market:

• A)individuals don't take into account all the benefits associated with their market choices.
• B)society bears part of the cost of private transactions.
• C)individuals consume more than the socially optimal quantity.
• D)All of these are true.

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Definitions:

Employee Stock Options

The right granted to employees by a company to buy its shares at a discounted price or a specific price within a specified time period.

Underwater

A term often used in finance to describe a situation where an asset's market value is less than the balance owed on the loan used to purchase that asset.

American Option

A type of options contract that can be exercised at any time before its expiration date.

Expiration Date

In finance, it refers to the date on which a financial instrument (e.g., options, futures) ceases to be valid and the right to exercise it no longer exists.