If there are both external benefits and external costs:
a. the social marginal benefit of an activity exceeds the private marginal benefit.
b. the private marginal benefit of an activity exceeds the private marginal cost.
c. the social marginal cost of an activity exceeds the private marginal cost
d. Both a. and c. are true.
d
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Looking at the components of the income approach we see that
A) compensation of employees is the largest category. B) consumption is the largest category. C) profits are the largest category. D) rental income is the largest category.
When actual output is less than potential output there is a(n):
A. trade deficit. B. budget deficit. C. recessionary gap. D. budget surplus.
In a market with barriers to entry:
A. the implications of Adam Smith's theory of the invisible hand can be expected to hold. B. prices will direct productive resources toward underserved markets. C. economic profit will not fall to zero in the long run. D. firms will earn zero economic profit in the long run.
As output increases, average fixed costs
A. initially decrease and then increase. B. increase. C. decrease. D. remain constant.