When externalities exist, buyers and sellers
A. neglect the external effects of their actions, but the market equilibrium is still efficient.
B. do not neglect the external effects of their actions, and the market equilibrium is efficient.
C. neglect the external effects of their actions, and the market equilibrium is not efficient.
D. do not neglect the external effects of their actions, and the market equilibrium is not efficient.
When externalities exist, buyers and sellers
A. neglect the external effects of their actions, but the market equilibrium is still efficient.
B. do not neglect the external effects of their actions, and the market equilibrium is efficient.
C. neglect the external effects of their actions, and the market equilibrium is not efficient.
D. do not neglect the external effects of their actions, and the market equilibrium is not efficient.
Related textbook solutions
Related questions
QUESTION 16
Positive externalities exist because:
| a. |
internal benefits are greater than external benefits. |
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| b. |
internal benefits are greater than social benefits. |
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| c. |
internal benefits are less than external benefits. |
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| d. |
external benefits are greater than social benefits. |
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| e. |
internal benefits are less than social benefits. |
QUESTION 17
What is a black market?
| a. |
It is an illegal market that emerges when binding price ceilings are in place. |
|
| b. |
It is an illegal market that emerges when only binding price ceilings and binding price floors are in place. |
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| c. |
It is an illegal market that emerges when no price controls are present. |
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| d. |
It is an illegal market that emerges when binding and nonbinding price controls are in |
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| e. |
It is an illegal market that emerges when binding price floors are in place. |
QUESTION 18
The personal decisions of consumers and firms are based on:
| a. |
external costs. |
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| b. |
public-good costs. |
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| c. |
third-party costs. |
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| d. |
internal costs. |
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| e. |
social cost. |
QUESTION 19
When the price is _________ the equilibrium price, we would expect there to be a _________, causing the market to put _________ pressure on the price until it went back to the equilibrium price.
| a. |
below; shortage; downward |
|
| b. |
above; shortage; downward |
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| c. |
above; surplus; upward |
|
| d. |
above; surplus; downward |
|
| e. |
below; surplus; upward |
