When External Costs Result from the Production of a Good

question 26

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:

Standing Armies

Standing armies are permanent, professional armies maintained in times of peace as well as war, differing from temporary armies raised during specific conflicts.

Kings

Hereditary monarchs who rule over a kingdom, often considered the highest authority within a monarchical system and symbols of national unity.

Nobles of the Robe

French nobility who gained their titles by serving in the judicial or administrative branches, as opposed to inheriting them.

Inherited Titles

Titles of nobility or honor passed down through generations within families, often associated with specific duties, privileges, or estates.