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:

Labor Demand

Refers to the quantity of labor that employers are willing and able to hire at a given wage rate in a given time period.

Statistical Discrimination

Statistical discrimination happens when assumptions are made about individuals based on aggregate statistics or stereotypes rather than personal attributes.

On-The-Job Training

This is a form of education where employees learn and acquire skills while working at their job positions.