The figure above shows the market for pants. If the production of the pants results in an external cost from pollution that is the result of the dye used, then
A) 6 million pairs is the efficient quantity.
B) fewer than 6 million pairs is the efficient quantity.
C) more than 6 million pairs is the efficient quantity.
D) None of the above answers is necessarily correct because more information is needed about the size of the external cost.
E) None of the above answers is correct because it is impossible to tell whether the external cost results in underproduction or overproduction.
B
You might also like to view...
Suppose that the production function is Y = AK0.7L0.3, the number of workers equals 800, the capital stock is $150,000, and total factor productivity is 3
What is the value of real GDP? What will happen to real GDP if total factor productivity doubles?
Adam Smith's diamond-water puzzle
a. can be resolved by distinguishing between marginal and total utility. b. occurs because diamonds have no utility. c. occurs because scarcity increases total utility. d. will likely never be resolved with existing economic tools.
Refer to the information provided in Figure 23.4 below to answer the question(s) that follow.
Figure 23.4Refer to Figure 23.4. The aggregate consumption functions C2 and C3
A. imply the same MPS. B. have the same MPC. C. differ in terms of the amount of consumption when income is zero. D. all of the above.
In the Aggregate Demand - Aggregate Supply diagram in Figure 8.1, Box 4 should be filled with 
A. PI for Price Index. B. AD for Aggregate Demand. C. RGDP for Real Gross Domestic Product. D. AS for Aggregate Supply.