Which One of the Following Statements Is Correct Regarding Externalities

question 53

Multiple Choice

Which one of the following statements is correct regarding externalities?

• A)The existence of a negative externality leads to the outcome that too little of the good will be produced.
• B)Externalities lead to an efficient outcome.
• C)The existence of a positive externality leads to the outcome that too much of the good will be produced.
• D)Externalities occur when a decision creates costs or benefits for actors other than the one making the decision.

Recognize the implications of price changes on resource demand and employment levels.

Comprehend the concepts of derived demand and how it differs from final demand.

Understand the effects of complementary and substitute resources on productivity.

Differentiate between the substitution effect and the output effect and their impact on resource allocation.

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Definitions:

Mutually Exclusive

Describes events that cannot occur at the same time, meaning the occurrence of one event excludes the occurrence of another.

Conditional Probability

The probability of an event occurring given that another event has already occurred, often calculated to take into account prior knowledge.

Aromatic

A class of compounds characterized by the presence of one or more benzene rings which have delocalized pi electrons.

Antiaromatic

A type of cyclic compound that is destabilized by the delocalization of its electrons, failing to meet the criteria for aromatic stability.