A Positive Externality Generates

question 9

Multiple Choice

A positive externality generates

• A) a social cost curve that is above the supply curve (private cost curve) for a good.
• B) a benefit to suppliers that is greater than the value of producer surplus
• C) a social value curve that is above the demand curve (private value curve) for a good.
• D) a social value curve that is below the demand curve (private value curve) for a good.

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Definitions:

Variable Input

Any resource used in production whose quantity can be changed in the short term to increase or decrease output, such as labor or raw materials.

Marginal Cost

The expenditure incurred from creating one more unit of a product or service.

Total Variable Cost

The total of expenses that vary directly with the level of production or output.

Marginal Cost

The increment in expense for generating an additional unit of a product or service.