When Externalities Exist, Buyers and Sellers

question 49

Multiple Choice

When externalities exist, buyers and sellers

• A)neglect the external effects of their actions, but the market equilibrium is still efficient.
• B)do not neglect the external effects of their actions, and the market equilibrium is efficient.
• C)neglect the external effects of their actions, and the market equilibrium is not efficient.
• D)do not neglect the external effects of their actions, and the market equilibrium is not efficient.

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Definitions:

Inventory Finance

A line of credit or loan specifically intended to help businesses purchase inventory, often secured by the inventory itself.

Long-Term Note

A debt obligation with a repayment period typically exceeding one year, often used for significant purchases or investment.

Refinancing

The process of replacing an existing loan with a new loan, typically to secure better interest rates or loan terms.

Indirect Guarantees

Obligations assumed by a third party to ensure the performance or repayment of another entity's debts or obligations without a direct contractual commitment.