"If production of a good creates an external cost, then, when production is such that the marginal private costs are equal to the marginal private benefits, the market outcome will be inefficient"
Explain whether this assertion is correct or incorrect.
The assertion is correct. Efficiency requires that the marginal social benefit equal the marginal social cost. If the production of a good creates an external cost, then the marginal private cost does not equal the marginal social cost. So, even if the marginal private benefit equals the marginal social benefit, setting the marginal private cost equal to the marginal private benefit creates inefficiency because the marginal social benefit does not equal the marginal social cost.
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During a(n) ________ the demand for money decreases because ________
A) recession; the price level rises B) recession; real GDP decreases C) equilibrium; real GDP decreases D) recession; nominal GDP increases E) expansion; real GDP decreases
A period of stagflation is part of the normal aftermath of a period of excessive aggregate demand.
Answer the following statement true (T) or false (F)
A new technology that increases labor productivity will shift the
a. demand curve for labor to the left b. MLC curve to the left c. MPP curve upward d. MLC curve to the right e. demand for the good to the right
Say's law says that
A. consumption is greater than supply. B. people produce the goods they consume. C. desired expenditures always equal actual expenditures. D. people consume the goods they produce.