An Externality Occurs When

question 12

Multiple Choice

An externality occurs when

• A) the costs of producing a good are paid entirely by the producer.
• B) some of the costs of producing a good are paid by someone other than the producer.
• C) the marginal social cost of an activity increases as that activity is increased.
• D) Both answers A and C are correct.

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Definitions:

Red Bone Marrow

Vascularized, modified connective tissue that is sometimes found in the cavities of spongy bone; site of blood cell formation.

Medullary Cavity

The central cavity of bone shafts where yellow marrow (fat cells) is stored.

Dense Fibrous Connective Tissue

Type of connective tissue containing many collagen fibers packed together; found in tendons and ligaments, for example.

Spongy Bone

Type of bone that has an irregular, meshlike arrangement of thin plates of bone.