An Externality Exists When

question 87

Multiple Choice

An externality exists when

• A) the benefits from consuming the service affect only the purchasers of that service.
• B) every person in a market system has a chance to influence how much of a product should be produced.
• C) the price of the private transaction does not reflect all the costs of the items involved in that transaction.
• D) the costs of producing a service affect only the sellers of that service.
• E) only the buyers and sellers are affected by the production of a product or service.

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Definitions:

Power

The capacity or ability to direct or influence the behavior of others or the course of events.

Legitimate Power

The lawful right to make a decision and expect compliance.

MBA

Stands for Master of Business Administration, a postgraduate degree focusing on business management, strategy, finance, and leadership skills.

Corporate Officer

A high-ranking executive with decision-making powers within a corporation, often appointed by the board of directors.