Suppose a Good Has an External Benefit and No External

question 233

Multiple Choice

Suppose a good has an external benefit and no external cost. When a competitive, unregulated market is at its equilibrium, then the

• A) marginal private benefit is less than the marginal social benefit.
• B) marginal private benefit is greater than the marginal social benefit.
• C) marginal private cost is less than the marginal social cost.
• D) marginal private cost is greater than the marginal social cost.

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Definitions:

Neutral Behavior

Actions or responses that are neither particularly positive nor negative, often indicating a state of impartiality.

Competitive

A state or attitude involving rivalry, where individuals or groups strive to achieve a goal that cannot be shared or where achieving the goal by one means others do not.

Bilateral Threats

Situations or scenarios where two parties or nations pose mutual threats to each other's security or interests.

Unilateral Threats

Actions or statements made by one party intended to intimidate or coerce another, without seeking mutual agreement or negotiation.