Which of the Following Is an Example of an Externality

question 117

Multiple Choice

Which of the following is an example of an externality?

• A)Drug abuse affecting David's health
• B)Sara taking a break from work
• C)A transaction between two parties, affecting them alone
• D)Tom's smoking affecting his roommate's health

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Definitions:

Utility Maximizing

A principle in economics where individuals or entities aim to achieve the highest level of satisfaction with their choices, given their resources.

Indifference Curve

Represents a graph that shows a combination of two goods that give the consumer equal satisfaction and utility, thereby making the consumer indifferent.

Absolute Value

A mathematical function that describes the distance of a number on the real number line from zero, without considering direction.

Slope

The rate at which one variable changes in relation to another variable, often used in the context of a graph.