Which of the Following Is the Best Definition of an Externality

question 73

Multiple Choice

Which of the following is the best definition of an externality?

• A) When firms sell products at a price greater than marginal cost
• B) When government intervention in a market reduces consumer surplus
• C) When an economic activity imposes spillover costs or benefits on a third party
• D) When a worker takes a job "off the books" to avoid paying taxes

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Definitions:

Agricultural Products

Items derived from farming and agriculture, such as crops and livestock.

Living Standards

indicate the wealth, comfort, material goods, and necessities available to a person or society, often used as a measure of economic well-being.

Output Per Capita

The average production of goods and services per person, often used as a measure of a country's standard of living or economic performance.

Low-Income Countries

Countries classified as low-income have significantly lower GDP per capita compared to the global average, often indicating limited economic development.