A good that has external costs associated with its production will be
A. not produced.
B. underproduced.
C. overproduced.
D. produced at the optimal level.
Answer: C
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Which condition(s) must exist for the Coase theorem to hold? I. Property rights must exist. II. Transactions costs must be measurable. III. A small number of parties must be involved
A) I and II only B) I and III only C) II and III only D) I, II and III
A firm producing ink pens reports the following production information:
# of Workers Total Product (boxes of pens per hour) 0 0 1 45 2 80 3 100 4 116 5 126 6 131 The pens sell in a competitive market at a price of $0.50 per box. The firm hires workers in a competitive labor market at a wage of $9 per hour. How many workers should the firm hire? Explain your answer.
Firms in long-run perfect competition produce at
A) increasing returns to scale. B) decreasing returns to scale. C) constant returns to scale. D) no returns to scale.
Marginal revenue for a monopolist is computed as
a. average revenue divided by quantity sold. b. average revenue times quantity divided by price. c. total revenue divided by quantity sold. d. change in total revenue per one unit increase in quantity sold.