An Externality Arises When a Person Engages in an Activity

question 464

Multiple Choice

An externality arises when a person engages in an activity that influences the well-being of

• A)buyers in the market for that activity and yet neither pays nor receives any compensation for that effect.
• B)sellers in the market for that activity and yet neither pays nor receives any compensation for that effect.
• C)bystanders in the market for that activity and yet neither pays nor receives any compensation for that effect.
• D)Both (a) and (b) are correct.

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Definitions:

Aldosterone

A substance generated by the adrenal glands that plays a role in regulating blood pressure through managing the balance of sodium and water in the body.

Hypogastric Region

The lower central part of the abdomen located below the umbilical region.

Umbilicus

Also known as the navel or belly button, it is the scar on the abdomen that marks the former attachment point of the umbilical cord.

Lumbar Region

The lower part of the spine, consisting of five vertebrae, which plays a key role in supporting the upper body and allowing movement.