An Externality Arises When

question 45

Multiple Choice

An externality arises when:

• A)an economic good is produced by many firms.
• B)the actions of a decision maker affect other decision makers in a way not reflected in the market price.
• C)the actions of a decision maker do not affect other decision makers.
• D)the market equilibrium is inefficient.

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Definitions:

Price Increases

The act of raising the cost of products or services, often in response to increased production costs or to leverage market demand.

Prescription Drugs

Medicines that can only be sold to consumers possessing a valid prescription from a healthcare professional.

Spring Break Vacations

Holiday periods typically occurring in early spring where students and families often travel for leisure and relaxation, commonly to warm or tropical destinations.

Specific Brand

A particular brand that is distinguished by its unique identity, product offerings, and market position.