In the Presence of Externalities, Market Prices Do Not Reflect

question 148

True/False

In the presence of externalities, market prices do not reflect all the social costs or benefits of an activity.

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Definitions:

Sweater

A knitted garment typically covering the upper body, designed for warmth or fashion.

Neue Sachlichkeit

German, “new objectivity.” An art movement that grew directly out of the World War I experiences of a group of German artists who sought to show the horrors of the war and its effects.

Die Brücke

German, “the bridge.” An early-20th-century German Expressionist art movement under the leadership of Ernst Ludwig Kirchner. The group thought of itself as the bridge between the old age and the new.

Der Blaue Reiter

German, “the blue rider.” An early-20th-century German Expressionist art movement founded by Vassily Kandinsky and Franz Marc. The artists selected the whimsical name because of their mutual interest in the color blue and horses.