206 - 206 Refer to Figure 10-2 At the private market outcome the equilibrium price will be a P0 b P1 c P2 d P3 ANS B P1 DIF:2 SECTION 1 TYPE M

206 - 206 Refer to Figure 10-2 At the private market...

This preview shows page 1 out of 1 page.

206.Refer to Figure 10-2. At the private market outcome, the equilibrium price will be a.P0.b.P1.c.P2.d.P3.ANS: BP1.DIF:2 SECTION: 1 TYPE: M TRUE/FALSE 1.When a transaction between a buyer and seller directly affects a third party, the effect is calledan externality. 2.In a market characterized by externalities, the market equilibrium fails to maximize the total benefit to society as a whole. 3.Negative externalities lead markets to produce a smaller quantity of a good than is socially desirable, while positive externalities lead markets to produce a larger quantity of a good than
Image of page 1

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture