Which of the Following Is True

question 194

Multiple Choice

Which of the following is true?

• A)Competitive markets that are free of government interference will efficiently price externalities.
• B)Nonmarket economies have historically created less environmental damage than market economies.
• C)Externalities are rare and in practice are not relevant to policy makers.
• D)Public institutions, private firms, and consumers all create externalities.

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Definitions:

Normal Good

A type of good for which demand increases as the income of the consumer increases.

Popcorn

A type of corn kernel which expands and puffs up when heated, commonly seasoned and served as a snack.

DVDs

Digital Versatile Discs, a type of optical storage media used for storing data, including movies and software.

Luxury Good

A good for which demand increases more than proportionally as income rises, often perceived as status symbols.