Which of the Following Is an Example of an Externality

question 55

Multiple Choice

Which of the following is an example of an externality?

• A)A paper mill dumps waste into the river.
• B)A neighbor's loud music disrupts sleep.
• C)A drunk driver causes an accident that injures another person.
• D)All of the above are correct.

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Definitions:

Equity

The value of an ownership interest in a company, represented by the share of assets after all liabilities have been deducted.

Treasury Bills

Short-term government securities issued at a discount from the face value and maturing at par, used as a means for governments to borrow money.

Call Option

In finance, it refers to a pact allowing the acquiring party the opportunity, without being forced, to purchase assets like securities, bonds, or commodities at a price that is determined beforehand, within a certain time limit.