Which of the Following Statements Is True

question 6

Multiple Choice

Which of the following statements is true?

• A)In the case of positive externalities,a private market will produce too little of the good compared with the socially efficient level of output.
• B)In the case of positive externalities,a private market will produce too much of the good compared with the socially efficient level of output.
• C)Negative externalities occur when benefits accrue to individuals not directly involved in the transaction.
• D)Positive externalities occur when costs are imposed on individuals not directly involved in the transaction.
• E)In the case of negative externalities,a private market will produce too little of the good compared with the socially efficient level of output.

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Definitions:

Continuity Correction

An adjustment made when approximating a discrete distribution with a continuous one, often applied in binomial and poisson distributions.

Binomial Distribution

A probability distribution that describes the number of successes in a fixed number of independent experiments, each with the same probability of success.

Normal Distribution

A bell-shaped curve that represents the distribution of many types of data where most values cluster around a central mean and probabilities for values taper off equally in both directions.

Probability of Success

The likelihood that an action, experiment, or event will produce a desired outcome, often used in the context of statistical experiments.