If the Market Price of a Good Does NOT Include

question 238

Multiple Choice

If the market price of a good does NOT include all of the costs and benefits that arise from the production or consumption of the good, then

• A) the market is perfectly competitive.
• B) an externality is present.
• C) society is consuming and producing the optimal amount of the good.
• D) resources are properly allocated.

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Definitions:

Services Balance

The difference between a country's exports and imports of services.

Balance Of Trade

The difference between a country's exports and imports of goods.

Comparative Advantage

An economic principle that states that an entity (e.g., country, region, or individual) can produce a good at a lower opportunity cost compared to others, leading to more efficient trading possibilities.

Absolute Advantage

The capacity of a nation, person, corporation, or area to generate a product or offer a service at a per-unit cost that is cheaper than the per-unit cost at which any other party produces the same product or service.