When Externalities Occur,economic Agents

question 55

Multiple Choice

When externalities occur,economic agents:

• A)disregard the external effects of their actions,but the market outcome is efficient.
• B)disregard the external effects of their actions,and the market outcome is inefficient.
• C)consider the external effects of their actions,and the market outcome is efficient.
• D)consider the external effects of their actions,but the market outcome is inefficient.

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Definitions:

Interaction Term

A variable in a statistical model that captures the effect of two or more variables acting together on a dependent variable.

First-order Model

A mathematical or statistical model that represents systems or processes using first-degree equations or relationships.

Significance Level

The probability of rejecting the null hypothesis when it is actually true, often denoted by alpha.

ANOVA Table

A table that displays the output of an Analysis of Variance, which shows statistical information such as sums of squares, degrees of freedom, mean squares, and F-statistics.