Use the following information to answer the question below. It is the custom for paper mills located alongside the Layzee River to discharge waste products into the river. As a result, operators of hydroelectric power-generating plants downstream along the river find that they must clean up the river's water before it flows through their equipment. In the situation described above, we would expect an

A. underproduction of paper in the mills.
B. overproduction of paper in the mills.
C. attainment of allocative efficiency in the market.
D. external cost resulting from the production of hydroelectric power.


Answer: B

Economics

You might also like to view...

The monopoly's marginal revenue curve

a. is equivalent to its demand curve b. lies below its demand curve c. is perfectly elastic d. is perfectly inelastic e. has a positive slope

Economics

An identity is an equation that

a. describes an equilibrium. b. pertains to macroeconomics, not to microeconomics. c. must be true because of how the variables in the equation are defined. d. involves final goods, not intermediate goods.

Economics

Labor unions may attempt to raise wage rates by

A. forcing employers, under the threat of a strike, to pay above-equilibrium wage rates. B. increasing the price of complementary resources. C. increasing the supply of labor. D. decreasing the demand for labor.

Economics

A monopolist faces a demand curve that

A. is below the marginal revenue curve. B. is downward sloping. C. coincides with the industry supply. D. is perfectly horizontal at the market price.

Economics