Suppose that one firm produces a product that results in negative external costs to society. This information suggests that
A) resources are under-allocated to the firm.
B) the equilibrium market price of the product includes the external costs borne by society.
C) resources are over-allocated to the firm.
D) at the market price, quantity demanded is less than quantity supplied.
Answer: C
You might also like to view...
Private solutions to externalities are most effective if ________
A) transaction costs associated with bargaining are low B) transaction costs associated with bargaining are high C) property rights are not defined clearly D) a large number of people are affected by the externalities
Refer to the figure above. What is the price effect of a price increase from $3 to $5?
A) $200 B) $400 C) $800 D) $1,000
The advent of money market mutual funds is __________ the trend of "institutionalization," in which a __________ percentage of financial assets are directly owned by individuals
A) part of; growing B) part of; shrinking C) not a part of; growing D) not a part of; shrinking
Economies of scale is another term for
A. increasing returns to scale. B. constant returns to scale. C. increasing marginal physical productivity. D. decreasing returns to scale.