When an external cost exists in the production of a good, firms tend to
A. over-produce the good.
B. keep production constant throughout the year.
C. under-allocate resources to the production of the good.
D. under-produce the good since society pays these costs.
Answer: A
You might also like to view...
In economics, abstraction from reality is necessary because of the complexity of the real world.
Answer the following statement true (T) or false (F)
If the interest rate is positive, the present value of $10 to be received in the future is
A. less than $10. B. equal to $10. C. more than $10. D. Any of the above is possible, depending on the interest rate and when the payment is to be received.
Every two weeks Hailey gets a check for the freelance work she does for Suzy’s Networking Services. This payment is a component of the ______ market.
a. product b. factor c. stock d. bond
Refer to the short-run information provided in Figure 8.5 below to answer the question(s) that follow. 
Figure 8.5 Refer to Figure 8.5. If no drones are produced, total variable costs are
A. $0. B. $25. C. $50. D. indeterminate from this information.