What Does a Positive Externality Cause

question 19

Multiple Choice

What does a positive externality cause?

• A)The marginal social benefit to be equal to the marginal private cost of the last unit produced
• B)The marginal social benefit to be less than the marginal private cost of the last unit produced
• C)The marginal social benefit to exceed the marginal private cost of the last unit produced
• D)The marginal private benefit to exceed the marginal social cost of the last unit produced

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Definitions:

Foreign Exchange Market

A financial market in which the currencies of different countries are traded.

Direct Quote

A representation of the exchange rate between two currencies, stating how much of the home currency is required to buy one unit of the foreign currency.

Forward Exchange Rate

The price agreed upon for a currency transaction that will occur at a future date, used to hedge against currency risk.

Premium

An amount paid in addition to the standard or nominal amount, often for insurance, superior products, or securities above their face value.