If an Externality Is Present in a Market, Economic Efficiency

question 129

Multiple Choice

If an externality is present in a market, economic efficiency may be enhanced by

• A)increased competition.
• B)weakening property rights.
• C)better informed market participants.
• D)government intervention.

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Definitions:

Movie Tickets

A form of voucher or certificate that entitles the holder to admission to a film screening.

Elastic

Describes a situation where a change in one variable, such as price, leads to a significant change in another variable, such as demand.

Price Elasticity of Demand

An indicator of consumer sensitivity to price fluctuations, represented by the degree to which the demand for a product varies in response to alterations in its price.

Absolute Value

The distance of a number from zero on a number line, without considering its direction; always a positive number or zero.