Which of the following statements is TRUE of external costs?
A. There are no good ways to correct for external costs.
B. When external costs exist, the price of the good will be deceptively low leading to an overallocation of resources.
C. External costs should only be corrected for if the correction will not increase the market price.
D. External costs should not be corrected since people will bear the costs whether they are corrected or not.
Answer: B
You might also like to view...
The total market value of capital assets in the United States is about $30 trillion dollars.
Answer the following statement true (T) or false (F)
Use the concept of present value to explain the inverse relationship between the interest rate and the amount of investment a firm undertakes
What will be an ideal response?
Which of the following shows a negative relationship between the output and unemployment gaps?
A) the AS curve B) the Phillips curve C) Okun's law D) the classical dichotomy E) none of the above
Refer to Scenario 10.4. Given the information above, what are the profit maximizing number of tickets sold and the price of tickets?
A) 0, $60 B) 20,000, $50 C) 40,000, $40 D) 60,000, $30 E) 80,000, $20