An Externality Is a Cost or Benefit Created by a Transaction

question 23

Multiple Choice

An externality is a cost or benefit created by a transaction that

• A) is outside the firm's ability to control.
• B) is a result of regulatory market failure.
• C) reduces antitrust concerns.
• D) substitutes most-favored-customer prices for cost-plus markups.
• E) is not paid for or enjoyed by those involved directly in the transaction.

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Definitions:

Id Impulses

Primitive instincts and drives present from birth, according to Freudian theory, that operate at the unconscious level.

Superego

In psychoanalytic theory, the part of the personality that represents internalized ideals, ethics, and provides standards for judgment.

Ego Function

Psychological processes associated with the self that are responsible for perception, judgment, tolerance of ambiguity, and reality testing.

Defense Mechanism

Psychological strategies used unconsciously by individuals to protect themselves from anxiety and to cope with reality.