In the Absence of Regulation,which of the Following Is True

question 3

Multiple Choice

In the absence of regulation,which of the following is true of a good or service that generates a positive externality?

• A)The supply of the good will be less than the socially optimal level of output.
• B)The producer will be able to capture the benefit from the positive externality in the form of increased profits.
• C)The market price of the good will be equal to its marginal external cost [MEC].
• D)The market price of the good will be lower than the socially optimal price.
• E)The producer will produce the good at the point where marginal total cost [MTC] equals price.

---

Definitions:

Cognitive Therapy

A form of psychotherapy that aims to change maladaptive thinking patterns, believing that these can lead to negative emotions and behaviors.

Depression

A condition in mental health defined by a lasting feeling of unhappiness or apathy towards activities, resulting in major interference with daily routines.

Beck

Aaron T. Beck, a psychiatrist known for developing cognitive therapy, particularly for depression.

Overgeneralizing

A cognitive distortion involving broad, sweeping conclusions based on a single event or piece of evidence.