An extenality O A. O B. O c. refers to a benefit or cost of an economic activity

Question

An extenality O A. O B. O c. refers to a benefit or cost of an economic activity that affects someone who is not directly associated with it. interferes with the economic efficiency of a market equilibrium. may require government intervention. D. all of the above. O E. Aand B only. Which of the following are examples of activities that generate externalities in the market for health care? (Check all that apply) A. Individuals engaging in injurious or reckless lifestyle choices. B. Technological advances yielding better medical equipment. C. Medical schools maintaining strict standards. D. People receiving vaccinations against infectious diseases.

Explanation / Answer

1. Correct option: (d) all of the above

Reason: Externality is a cost or benefit associated with a transaction which affects a third party. It changes socially optimal allocation and requires government intervention to bring the economy back to socially optimal level.

2. Correct option: (a) and (d)

Reason: These activities will have a positive or negative impact on society

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