The Socially Optimal Level of Output of a Good with an Externality

question 187

Multiple Choice

The socially optimal level of output of a good with an externality occurs when

• A)the marginal private costs of production are equal to marginal private revenues
• B)the firm maximizes its profits
• C)the consumer maximizes his or her utility
• D)the marginal social cost of production equals the marginal social benefit of the good
• E)the firm is making a normal profit

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Definitions:

Neck

Slightly constricted part of a tooth, between the crown and the root.

Nasolacrimal Canal

A duct that drains tears from the lacrimal sac into the nasal cavity.

Tears

A clear fluid secreted by the lacrimal glands of the eye, serving to lubricate the eye and wash away irritants.

Eyes

Eyes are organs of vision that respond to light and allow for vision by sending signals through the optic nerve to the brain.