An Externality Is

question 442

Multiple Choice

An externality is

• A)the costs that parties incur in the process of agreeing and following through on a bargain.
• B)the uncompensated impact of one person's actions on the well-being of a bystander.
• C)the proposition that private parties can bargain without cost over the allocation of resources.
• D)a market equilibrium tax.

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Definitions:

Unchanged Resource Prices

A situation where the prices of inputs required for production remain constant over a certain period.

Industry Type

A classification that groups companies based on similar business activities, products, or services.

Increasing Cost Industry

An industry in which costs per unit of output rise as the scale of production increases, often due to resource limitations or increasing input prices.

Factor Prices

The cost of inputs used in production, such as labor, land, and capital, which are influenced by supply and demand for these factors.