When a Negative Externality Is Present in a Market, the Government

question 20

Multiple Choice

When a negative externality is present in a market, the government should:

• A)always intervene.
• B)intervene it if the public supports doing so.
• C)never intervene.
• D)intervene if the benefit of doing so exceeds the cost.

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Definitions:

Car Dealership

A business that sells new or used cars at the retail level, typically based on a dealership contract with an automaker or its sales subsidiary.

Benefits

The advantages or positive outcomes gained from a product or action.

Sunk Cost

Costs that have already been incurred and cannot be recovered, which should not affect future investment or business decisions.

Outsourcing

The practice of contracting out certain business functions or processes to a third-party provider.