Which of the following describes how a negative externality affects a competitive market?
A) The externality causes a difference between the private cost of production and the social cost.
B) The externality causes a difference between the private cost of production and the private benefit from consumption.
C) The externality causes consumer surplus to exceed producer surplus.
D) The externality causes a difference between the private cost of production and the equilibrium price.
Answer: A
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The figure above shows a monopoly's total revenue and total cost curves. The monopoly's marginal revenue equals its marginal cost when it produces
A) 0 units of output. B) 5 units of output. C) 15 units of output. D) 20 units of output.
If you buy a put option on Treasury futures at 115, and at expiration the market price is 110, the ________ will ________ exercised
A) call; be B) put; be C) call; not be D) put; not be
If an oligopolistic manufacturer believes that he faces a kinked demand curve for his product, he thinks his competitors will ______ if he lowers his price and ____ if he raises his price.
A. lower their prices; raise their prices B. lower their prices; not raise their prices C. not lower their prices; raise their prices D. not lower their prices; not raise their prices
A balanced budget is present when
a. the economy is at full employment. b. the actual level of aggregate spending equals the planned level of spending. c. public sector spending equals private sector spending. d. government revenues equal government expenditures.