Externalities Cause the Market Mechanism to Allocate Goods and Resources

question 52

Multiple Choice

Externalities cause the market mechanism to allocate goods and resources inefficiently because

• A) nonconsenting third parties are generally not hurt by externalities.
• B) producers and consumers ignore signals given by the competitive market.
• C) prices are always higher than they should be.
• D) competitive markets fail to give producers and consumers correct price signals.

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Definitions:

Hardy Weinberg Principle

A principle that describes how allele and genotype frequencies in a population remain constant from generation to generation in the absence of evolutionary influences.

Antigens

Substances that are recognized by the immune system and can provoke an immune response, typically proteins or polysaccharides found on pathogens.

Dominant Allele

An allele that expresses its phenotype even in the presence of another (recessive) allele.

Hardy-Weinberg Equilibrium

A principle stating that genetic variation in a population will remain constant from one generation to the next in the absence of disturbing factors.