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:

Accuracy

The degree to which a measurement, calculation, or specification conforms to the correct value or a standard.

Validity

The extent to which a test or instrument accurately measures what it is intended to measure.

Instrument Used

Refers to the specific tool or device employed in a study, experiment, or assessment to collect data or measure variables.

Validity Evidence

Information or data that supports the accuracy and appropriateness of the inferences made from test scores or other assessment outcomes.