Assume a country agrees to a free-trade act with another country.In the process,some individuals are displaced from their jobs,thus the free-trade act results in a negative externality.
A) False
B) True
C) Only if those who were displaced are not compensated with another job or income transfer.
D) Only if those who were displaced were compensated with another job or income transfer.

Question

Quizplus · Accepted Answer

The free-trade act can result in a negative externality if the individuals who are displaced from their jobs are not compensated with another job or income transfer. Therefore, option C is the correct choice.

Assume a Country Agrees to a Free-Trade Act with Another