Suppose that the market price of good X equals the firm's cost of producing that good, but it does not reflect any costs imposed on society. Which of the following is FALSE?
A) The good is priced too low.
B) An external benefit is associated with good X.
C) Resources are over-allocated in the production of good X.
D) Too much of good X is being produced.
B
You might also like to view...
How does a change in quantity supplied differ from a change in supply?
A) A change in quantity supplied shifts the supply curve; a change in supply is a movement along the curve. B) A change in one of the ceteris paribus conditions affects quantity supplied, not supply. C) A change in the price affects quantity supplied, not supply. D) There is no difference.
What two fiscal policy measures do you recommend to remove it?
An unregulated natural monopolist would produce to the point at which
A) P = AC. B) MR = AC. C) MR = MC. D) P = MR.
All of the following are regulatory agencies EXCEPT
A) the National Rifle Association. B) the Environmental Protection Agency. C) the Food and Drug Administration. D) the Occupational Safety and Health Administration.