When Significant Externalities Exist

question 148

Multiple Choice

When significant externalities exist:
I. the market equilibrium is no longer efficient.
II. the market equilibrium is only efficient if the externality is an external benefit.
III. social surplus is not maximized.
IV. the government may increase efficiency by imposing a tax on the market.

• A) I only
• B) II and IV only
• C) I and III only
• D) II, III, and IV only

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Definitions:

Monthly Cycle

The menstrual cycle is a series of natural changes in hormone production and the structures of the uterus and ovaries of the female reproductive system.

Receptor Molecules

Proteins on the surface of cells or within cells that bind to specific molecules, triggering a response.

Target Cells

Cells that are specifically affected by hormones or other biochemical signals.

Water-soluble Hormones

Hormones that are soluble in water, allowing them to easily circulate in the blood and bind to cell surface receptors, triggering a response.