When External Costs Are Present in a Market

question 100

Multiple Choice

When external costs are present in a market,

• A) less of the good will be produced than the amount consistent with economic efficiency.
• B) more of the good will be produced than the amount consistent with economic efficiency.
• C) the amount of the good produced will be equal to the amount consistent with economic efficiency.
• D) corresponding external benefits are always generated.

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Definitions:

Sources of Power

The origins from which an individual or organization derives the ability to influence or control outcomes.

Bertrand Russell

A British philosopher, logician, mathematician, and social critic, best known for his work in mathematical logic and analytic philosophy.

Formalized Power

The officially recognized authority granted to an individual or organization, often reflected in a title or specific role.

Covert Power

Influence exerted indirectly or through non-obvious means, often hidden or behind the scenes, to affect decision-making or outcomes.