Suppose That the Production of a Good Causes Negative Externalities

question 124

Multiple Choice

Suppose that the production of a good causes negative externalities. What will happen if the good is produced at the level at which the marginal private cost curve meets the demand curve?

• A)The level of output will be socially desirable.
• B)The level of output will result in a net social cost.
• C)There will be a surplus.
• D)The producers will incur losses.
• E)There will be no buyer in the market.

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Definitions:

Bathroom Cleaners

Products specifically formulated to clean, disinfect, and deodorize bathrooms, tackling various surfaces such as toilets, tiles, and sinks.

Reward Power

The ability to influence others' behavior by offering positive incentives or rewards.

Wholesale Price

The cost at which goods are sold by wholesalers to retailers or distributors, generally lower than retail prices.

Larger Quantities

Denotes the procurement, production, or offering of goods in amounts greater than usual.