Which of the Following Describes How a Negative Externality Affects

question 65

Multiple Choice

Which of the following describes how a negative externality affects a competitive market?

• A)The externality causes a difference between the private cost of production and the social cost.
• B)The externality causes a difference between the private cost of production and the private benefit from consumption.
• C)The externality causes consumer surplus to exceed producer surplus.
• D)The externality causes a difference between the private cost of production and the equilibrium price.

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Definitions:

Psychophysicist

A scientist who studies psychophysics, a discipline focusing on the relationship between physical stimuli and the sensory responses these stimuli evoke in the human mind.

Difference Threshold

The minimal difference in intensity required between two sources of energy so that they will be perceived as being different.

Ernst Weber

A pioneering psychologist known for his work in the area of the sense of touch and the Weber-Fechner law regarding the perception of changes in a stimulus.

Bottom-Up Processing

The organization of the parts of a pattern to recognize, or form an image of, the pattern they compose.