When External Costs Result from the Production of a Good

question 45

Multiple Choice

When external costs result from the production of a good,

• A)Producers have an incentive to produce too little.
• B)Consumers have an incentive to consume too little.
• C)Both producers and consumers have an incentive to produce and consume too much.
• D)Producers and consumers are not affected.

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Definitions:

Adoption

The process of starting to use something new or integrating a new idea, habit, or technology into use.

Sampling

The process of selecting a subset of individuals or items from a larger population for the purpose of making statistical analysis.

Interest

The cost of borrowing money, typically expressed as a percentage rate, or the attention and curiosity someone shows towards a topic.

Adoption

The process of starting to use something new or integrating a new idea, habit, or innovation into use or practice.