When Externalities Exist, Buyers and Sellers

question 49

Multiple Choice

When externalities exist, buyers and sellers

• A)neglect the external effects of their actions, but the market equilibrium is still efficient.
• B)do not neglect the external effects of their actions, and the market equilibrium is efficient.
• C)neglect the external effects of their actions, and the market equilibrium is not efficient.
• D)do not neglect the external effects of their actions, and the market equilibrium is not efficient.

Identify the conditions under which a principal is liable for the actions of their agent.

Describe the different ways an agency relationship can arise.

Recognize the effects of nondisclosure of agency on contractual obligations and liabilities.

Understand how agency relationships affect third-party contracts.