An Action Creates an Externality If It

question 2

Multiple Choice

An action creates an externality if it

• A) Does not affect someone with whom the decision-maker has not engaged in a related market transaction
• B) Affects someone with whom the decision-maker has not engaged in a related market transaction
• C) Affects only those individuals engaged in the market transaction
• D) Affects only those individuals not in the market transaction

---

Definitions:

Fear-evoking Stimuli

Environmental or internal triggers that provoke a fear response, activating the body’s fight or flight reaction.

Behavior Therapy

A type of psychotherapy that focuses on changing undesirable behaviors through systematic exposure and other techniques.

Observational Learning

Acquiring knowledge by watching others' actions and the results of those actions.

Vicariously Reinforced

Learning through observing the rewards or punishments experienced by others, thus influencing the observer's own behavior.