Suppose That a Perfectly Competitive Industry Has an External Cost

question 140

Multiple Choice

Suppose that a perfectly competitive industry has an external cost (e.g. ,noise pollution) .The market outcome will ______ because the equilibrium price is ______.

• A) not maximize total surplus;greater than the true cost
• B) maximize total surplus;correct
• C) not maximize total surplus;too high
• D) maximize total surplus;too low
• E) not maximize total surplus;less than the true cost

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Definitions:

Theodore Roosevelt

The 26th president of the United States, noted for his exuberant personality, range of interests, and achievements in foreign policy, conservation, and progressive reforms.

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The unequal exposure of communities, often minority or impoverished, to environmental hazards due to discriminatory policies.

Toxic Waste Dumps

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Financial assistance, tax incentives, and other supportive measures provided by the government to corporations, often criticized as favoritism towards big business.