An Externality Arises When a Person Engages in an Activity

question 464

Multiple Choice

An externality arises when a person engages in an activity that influences the well-being of

• A)buyers in the market for that activity and yet neither pays nor receives any compensation for that effect.
• B)sellers in the market for that activity and yet neither pays nor receives any compensation for that effect.
• C)bystanders in the market for that activity and yet neither pays nor receives any compensation for that effect.
• D)Both (a) and (b) are correct.

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Definitions:

Converging Plates

The movement of two tectonic plates towards each other, often leading to geological features like mountains, earthquakes, and volcanoes.

Seafloor Spreading

The process by which new oceanic crust is formed at mid-ocean ridges and slowly moves away from them, caused by the divergence of tectonic plates.

Rifting

The process of the Earth's crust being pulled apart, leading to the formation of rift valleys and, eventually, new ocean basins.

Hurricane Sandy

A tropical cyclone that hit the Caribbean and United States in October 2012, causing widespread destruction and flooding, particularly in New York and New Jersey.