When Externalities Are Present

question 104

Multiple Choice

When externalities are present,

• A) suppliers will refuse to produce desired goods and services.
• B) this indicates that property rights are well-defined and enforced.
• C) competitive market outcomes may be inconsistent with ideal economic efficiency.
• D) competitive markets will generally achieve ideal economic efficiency.

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Definitions:

Environmental Regulations

Laws and rules designed to protect the environment that set limits on pollution, require permits for certain activities, and impose penalties for violations.

Special Interests

Groups that seek to influence governmental or organizational decisions in favor of their specific concerns or objectives.

Transaction Costs

Expenses incurred when buying or selling goods or services, including search, bargaining, and enforcement costs of a deal.

Air Quality

The condition of the air based on the amount of pollution present; influences environmental and human health.