When Does an Externality Occur

question 54

Multiple Choice

When does an externality occur?

• A) when only the people making the demand and supply decisions share the benefits or the costs of an activity
• B) when private costs of production are ignored
• C) when private costs of production equal the full social costs associated with production of a good
• D) when people other than those making the demand and supply decisions share the benefits or the costs of an activity

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Definitions:

Directly Interact

To engage or communicate with someone or something without any intermediary or tool.

Coordinate Work

The process of organizing and aligning activities, tasks, and projects to ensure they are executed in a harmonious and efficient manner.

Brooks' Law

The principle that adding manpower to a late software project makes it later, emphasizing the complexities of team dynamics.

Common Objective

A shared goal or target that all members of a group or team strive to achieve.