Consider an Industry That Produces an Output Q with Marginal

question 111

Multiple Choice

Consider an industry that produces an output Q with marginal private cost (MC) and marginal social cost (MSC) as given in the table: Which of the following is true?

• A) The production of each additional unit results in a larger marginal external cost.
• B) The production of each additional unit results in the same marginal external cost.
• C) The production of each additional unit results in a lower marginal external cost.
• D) There are no marginal external costs associated with the production of this good.

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Definitions:

Equity Securities

Financial assets representing ownership interest in a company, such as stocks.

Available-For-Sale Securities

Financial assets that are intended to be sold before their maturity date but are not actively traded or held to maturity, subject to changes in fair value recorded in other comprehensive income.

Trading Securities

Financial instruments like stocks or bonds that are bought and sold for the purpose of generating profits on short-term fluctuations in price.

Trading Gains

Profits realized from buying and selling financial instruments within a short period, aiming to benefit from market price movements.