Asked by
Paras Dhingra
on Dec 11, 2024
Verified
A market transaction causes an externality if someone
A) directly involved in the transaction receives uncompensated benefits or costs from it.
B) not directly involved in the transaction receives uncompensated benefits or costs from it.
C) directly involved in the transaction seeks legal assistance to ensure that the transaction is carried out.
D) not directly involved in the transaction interferes in it by imposing regulations or product standards.
Externality
A consequence of an industrial or commercial activity which affects other parties without this being reflected in market prices.
Uncompensated Benefits
Benefits that occur from an economic transaction that affect individuals not directly involved in the transaction, not compensated by the market.
- Investigate the effects of external costs and benefits on market performance.
Verified Answer
KS
Learning Objectives
- Investigate the effects of external costs and benefits on market performance.