All externalities:
A. create either a cost or benefit to a person other than the person who caused it.
B. are harmful to society and create costs external to the decision maker.
C. are addressed by the government through taxation.
D. are beneficial to society and create benefits external to the decision maker.
Answer: A
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People who enjoy the benefits of a public good without paying for them are called:
a. spillover parties. b. external consumers. c. free riders. d. antitrust violators.
Economists normally assume that the goal of a firm is to (i) earn profits as large as possible, even if it means reducing output. (ii) earn revenues as large as possible, even if it means reducing profits. (iii) minimize costs, regardless of profits
a. (i) only b. (i) and (ii) only c. (ii) and (iii) only d. (i), (ii), and (iii)