Which of the Following Is True of Externality

question 43

Multiple Choice

Which of the following is true of externality?

• A)An externality enhances the efficiency of the market system.
• B)An externality is not an economic problem because it is external to the market.
• C)An externality is a cost borne by the people who are directly or indirectly involved in the production of a good or service.
• D)An externality accrues to someone who had nothing to do with the production or consumption of a good or service.
• E)An externality refers to some unexpected change in the equilibrium price or quantity of a product.

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Definitions:

Strict Constructionists

Individuals who interpret the Constitution in a literal and narrow way, often limiting the powers of the federal government.

General Welfare

A clause in the Constitution that allows Congress to pass laws deemed necessary and proper for the health and well-being of the American populace.

Constitution

Essential rules or conventional norms that dictate how a state or similar body is managed.

Republican Party

An alternative name for Republicans, emphasizing its role as one of the two major political parties in the United States, also known as the GOP (Grand Old Party).