For Which of the Following Products Would a Consumer Most

question 66

Multiple Choice

For which of the following products would a consumer most likely use limited problem solving?

• A)Detergent
• B)Toothpaste
• C)Automobile
• D)Hair dryer
• E)Washing machine

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Definitions:

Externalities

Effects of a production or consumption activity on other parties not directly involved in the transaction, which may be either positive or negative.

Neutral Taxes

Taxes that do not affect the allocation of resources between different goods or activities in the economy.

Excess Burdens

The economic inefficiencies or losses that result from imposing taxes or government policies.

Principle of Second Best

An economic theory that suggests when a condition for a perfect market cannot be met, the next-best solution may involve violating another condition to improve efficiency.