The Only Way for a Society to Solve an Externality

question 32

True/False

The only way for a society to solve an externality problem is through some sort of government intervention.

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Definitions:

Price Elasticity

A measure of how much the quantity demanded or supplied of a good changes in response to a change in its price.

Demand

The quantity of a good or service that consumers are willing and able to purchase at various prices during a given time period.

Perfectly Inelastic

Refers to a scenario in which the amount demanded or supplied shows no reaction whatsoever to changes in price.

Total Revenue

The total amount of money earned by a business from the sale of its goods and services.