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When Economic Activity Imposes Costs on Others Not Directly Involved

Question 1

Multiple Choice

When economic activity imposes costs on others not directly involved in the transaction:


A) a negative externality exists.
B) a positive externality exists.
C) then the market,will produce too little of the good.
D) the tragedy of commons problem arises.
E) a free rider problem arises.

Correct Answer:

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