When Externalities Are Present in a Market, the Well-Being of Market

question 369

Multiple Choice

When externalities are present in a market, the well-being of market participants

• A)and market bystanders are both directly affected.
• B)and market bystanders are both indirectly affected.
• C)is directly affected, and market bystanders are indirectly affected.
• D)is indirectly affected, and market bystanders are directly affected.

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Definitions:

After-Tax Maintenance Cost

The expense associated with maintaining an asset or investment after accounting for the effects of income taxes.

Maintenance Cost

Expenses incurred to keep an asset in operational condition or restore it to its operational condition.

Tax Rate

The proportionality of income subject to tax for either a person or a business.

Discount Rate

This refers to the interest rate applied for computing the present value of forthcoming cash flows in the context of discounted cash flow analysis.