A Market with an Externality Can

question 199

Multiple Choice

A market with an externality can

• A)underproduce or overproduce a good.
• B)stabilize.
• C)operate efficiently without government intervention.
• D)move from a production point inside the production possibilities curve to a pareto optimal point.

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Definitions:

Prices Rise

A situation where the general level of prices for goods and services increases over a period of time, reducing purchasing power, often referred to as inflation.

Budget Line

An illustrated diagram detailing every possible pairing of two products affordable within a set budget at constant prices.

Horizontal Axis

In graphing, the x-axis, which is used to represent the independent variable or the baseline measure for comparison.

Vertical Axis

In a graph or chart, the y-axis that typically represents the dependent variable or the value being measured.