An Externality Exists When

question 44

Multiple Choice

An externality exists when

• A) goods are sold in specific geographic locations.
• B) some of the benefits or costs associated with a good are borne by third parties.
• C) the government taxes a good.
• D) the government subsidizes a good.

---

Definitions:

Sugar

A sweet-flavored substance derived primarily from sugarcane and sugar beet, used chiefly as an ingredient in food and beverages.

Equivalent Imports

Goods or services brought into a country that serve the same purpose as locally produced goods or services.

Quota

A government-imposed trade restriction limiting the number or monetary value of goods that can be imported or exported during a specified period.

Tariff

A tax imposed on imported goods, often to protect domestic industries or to generate revenue.