In the above figure, S1 represents the supply curve which includes private costs, and S2 is the supply curve which includes social costs
If the firm is producing a product that has external costs that the firm does have to pay, what will be the equilibrium price and quantity? A) P1, Q4
B) P2, Q3
C) P4, Q1
D) P3, Q2
D
You might also like to view...
The above figure shows the marginal benefits and marginal costs of a college education. What is the amount of the external benefit in the figure?
A) $0 B) $5,000 C) $10,000 D) $15,000
The hypothesis stating that people combine the effects of past policy changes on important economic variables with their own judgment about the future effects of future and current policy changes is known as
A) policy irrelevance hypothesis. B) rational expectations hypothesis. C) life cycle hypothesis. D) real business cycle hypothesis.
Natural monopolies:
A. are the only monopolies that are efficient. B. generally earn zero accounting profits due to regulations. C. can capture the lowest production costs possible for the industry. D. are always protected by government policy.
If the cost were greater than the marginal benefit of a good:
A. consumers could increase their utility by buying less. B. social net benefit would be maximized. C. consumers could increase their utility by buying more. D. producers should increase production.