A Market Transaction Causes an Externality If Someone

question 183

Multiple Choice

A market transaction causes an externality if someone

• A) directly involved in the transaction receives uncompensated benefits or costs from it.
• B) not directly involved in the transaction receives uncompensated benefits or costs from it.
• C) directly involved in the transaction seeks legal assistance to ensure that the transaction is carried out.
• D) not directly involved in the transaction interferes in it by imposing regulations or product standards.

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Definitions:

Monopolist

An entity that is the sole provider of a particular product or service in the market, gaining the ability to influence or set prices to its advantage.

Losses

Financial outcomes where expenses exceed revenues, resulting in negative profit for a business or individual.

Gains

The increase in wealth or resources, often measured as the difference between the sale price and the purchase price of an asset.

Behavioral Economists

Scholars who study the impact of psychological, social, cognitive, and emotional factors on the economic decisions of individuals and institutions.