Which of the Following Best Describes a Field Audit

question 68

Multiple Choice

Which of the following best describes a field audit?

• A) observing racial interactions, between strangers, in public situations
• B) sending two otherwise similar, but racially different, subjects into similar situations
• C) observing how public institutions, such as banks, treat people of different races and ethnicities
• D) sending people of the same race, but with significant differences in education or income, into similar situations

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Definitions:

External Costs

Costs created by an activity that affect other parties without them being reflected in the market prices, similar to negative externalities.

Production

The process of creating goods and services through the combination of labor, materials, and capital.

Coase Theorem

A principle that if trade in an externality is possible and there are no transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of rights.

Free-Rider Problem

A situation where some individuals consume more than their fair share of a public resource, or shoulder less of the cost of its production.