Externalities Are the Impacts

question 231

Multiple Choice

Externalities are the impacts

• A) that affect only the consumers in the private market.
• B) that affect only the producers in the private market.
• C) on the government.
• D) on third parties.

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Definitions:

Marginal Utility

The change in satisfaction or utility that an individual gains from consuming an additional unit of a good or service.

Marginal Utility

The extra pleasure or benefit gained by a consumer from consuming one more unit of a product or service.

Utility Maximizing Rule

A principle in economics stating that to maximize satisfaction or utility, consumers allocate their expenditures so that the last unit of currency spent on each product provides the same level of marginal utility.

Budget Constraint

The limitation on the purchasing ability of a consumer based on available income and prices.