An Externality Is

question 319

Multiple Choice

An externality is

• A) a third-party benefit or cost that is associated with the production of a good.
• B) when external forces such as war or flood affect the market.
• C) government intervention in the markets.
• D) transaction costs.

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Definitions:

Technological Advances

Innovations and improvements in technology that enhance efficiency, productivity, or quality in goods and services.

World Price

The price of a good that prevails in the world market for that good.

Oil Field

A region with an abundance of oil wells extracting petroleum (crude oil) from below ground.

Capital Income

Income generated from the investment of capital, such as dividends from stocks, interest on loans, or rental income from property.