If Some Activity Creates External Benefits as Well as Private

question 117

Multiple Choice

If some activity creates external benefits as well as private benefits, then economic theory suggests that the activity ought to be

• A)taxed.
• B)prohibited.
• C)subsidized.
• D)left alone.

---

Definitions:

Foreclosed

The legal process by which an owner's right to a property is terminated, usually due to failure to meet mortgage payment obligations.

Vickrey Auction

A sealed-bid auction where the highest bidder wins but pays the second-highest bid price.

Willingness To Pay

The maximum amount an individual is ready to spend for a good or service.

Revenue

The total amount of money earned by a business from its operations, including sales of goods and services, before any deductions are made.