When Significant Externalities Exist

question 148

Multiple Choice

When significant externalities exist:
I. the market equilibrium is no longer efficient.
II. the market equilibrium is only efficient if the externality is an external benefit.
III. social surplus is not maximized.
IV. the government may increase efficiency by imposing a tax on the market.

• A) I only
• B) II and IV only
• C) I and III only
• D) II, III, and IV only

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Definitions:

Chocolate Sales

The total quantity or revenue of chocolate products sold within a specific period.

Student Happiness

A psychological or academic research term that encompasses the overall well-being and contentment of students.

Nonsignificant Correlation

A relationship between two variables where the correlation does not reach statistical significance, indicating no strong evidence of a linear association.

P < 0.05

Indicates that the probability of the observed data, or something more extreme, assuming the null hypothesis is true, is less than 5%.