_____ arise whenever the actions of one party make another party worse or better off,yet the first party neither bears the cost nor receives the benefits of doing so.
A) Internalities
B) Externalities
C) Moral hazard
D) Adverse selection

Question

Quizplus · Accepted Answer

The definition describes externalities, which are the effects of an economic activity on third parties that are not directly involved. Internalities refer to the effects of an economic activity on those involved in the activity. Moral hazard and adverse selection are related to information asymmetry problems in insurance and market transactions.

_____ Arise Whenever the Actions of One Party Make Another