Which of the Following Is True of Externalities

question 38

Multiple Choice

Which of the following is true of externalities?

• A)Positive externalities arise when an economic activity imposes costs on others who are not directly involved in the activity.
• B)Negative externalities can be internalized by offering subsidies to the agents who generate such externalities.
• C)Like public goods,externalities always result in a free rider problem.
• D)Externalities may arise from either production or consumption of a good or service.

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Definitions:

Protected Market

A market shielded from foreign competition by tariffs, quotas, or other trade barriers to protect domestic industries.

Migration

The movement of people from one area to another, often across borders or within a country, for the purpose of settling, work, or seeking better living conditions.

Trade Restrictions

Measures imposed by governments to control the amount and types of goods and services traded across borders, such as tariffs, quotas, and embargoes.

Tariffs And Quotas

Government-imposed trade restrictions; tariffs are taxes on imported goods, while quotas limit the quantity that can be imported.