An externality is
A) a cost paid for by the producer of a good or service.
B) a benefit realized by the purchaser of a good or service.
C) anything that is external or not relevant to the production of a good or service.
D) a benefit or cost experienced by someone who is not a producer or consumer of a good or service.
D
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If the price of a soda increases from 75ยข to $1.00 and as a result the quantity demanded of sodas decreases from 10 to 9 per week, the elasticity of demand for sodas equals
A) 2.72. B) 0.37. C) 0.83. D) 1.20.
If a natural monopoly is allowed to set its price above its average total cost, then
A) the company makes an economic profit. B) the company incurs an economic loss. C) competitors will enter the market. D) the company will produce more than the efficient amount of output.