-The Figure Above Shows the Market for a Good with an External

question 33

Multiple Choice

-The figure above shows the market for a good with an external benefit. The efficient level of production is ________ units because ________.

• A) 8; marginal benefit equals the marginal external benefit
• B) 8; marginal benefit equals marginal cost
• C) 8; marginal cost is less than marginal social benefit
• D) 10; marginal cost equals marginal social benefit
• E) 10; marginal social benefit exceeds marginal benefit

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Definitions:

Firm

An organization or business entity engaged in commercial, industrial, or professional activities, typically with the aim of generating profit.

Normative

Relating to an evaluative or prescriptive standard or principle, often regarding moral or ethical considerations.

Value Judgments

assessments based on personal views about the worth, beauty, or morality of something, rather than on measurable criteria.

Positive

Describes an approach or statement that is based on factual assertions or affirmative actions, often used in the context of economic analysis.