An Externality Occurs When

question 77

Multiple Choice

An externality occurs when:

• A)​people other than those making the demand and supply decisions share the benefits or the costs of an activity.
• B)​only the people making the demand and supply decisions share the benefits or the costs of an activity.
• C)​private costs of production equal the full social costs associated with production of a good.
• D)​private costs of production are ignored.

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Definitions:

Methane Gas

A colorless, odorless flammable gas that is the simplest alkane, consisting of one carbon atom and four hydrogen atoms, widely used as a fuel.

Complete Combustion

A chemical reaction in which a compound reacts with an oxygen-rich environment to produce a complete oxidation, releasing maximum energy.

Ethanol

A volatile, flammable, colorless liquid, commonly known as alcohol, used in beverages and as a solvent or fuel.

Complete Combustion

A chemical process in which a compound, usually a hydrocarbon, reacts fully with an abundant supply of oxygen to produce carbon dioxide, water, and energy.