When a firm produces a product that creates external costs

A) the firm produces a level of output larger than would be produced without the external cost.
B) the firm produces a level of output smaller than would be produced without the external cost.
C) the firm produces a level of output which would be the same as it would produce without the external cost.
D) the market provides the efficient level of output even with the existence of the external cost.


Answer: A

Economics

You might also like to view...

China's population is over 1.5 billion, while the population of the United States is about 300 million. This fact means that China has much more human capital than the U.S. does. True or false? Explain your answer

Indicate whether the statement is true or false

Economics

To "accommodate" an expansionary fiscal policy, the Fed ________ the money supply in order to hold ________ constant

A) expands, the interest rate B) expands, real income C) contracts, the interest rate D) contracts, real income

Economics

The VMP is the Value of Marginal Product.

A. True B. False C. Uncertain

Economics

If price is initially above the equilibrium level

A) the supply curve will shift rightward. B) the supply curve will shift leftward. C) excess supply exists. D) all firms can sell as much as they want.

Economics