For a Good Whose Production Creates an External Cost, the Efficient

question 62

Multiple Choice

For a good whose production creates an external cost, the efficient quantity of output is

• A) where the market demand curve and the market supply curve intersect.
• B) zero.
• C) where the marginal social cost curve and marginal benefit curve intersect.
• D) the amount of production so that the marginal social benefit exceeds the marginal social cost by as much as possible.
• E) as low as possible.

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Definitions:

Water Scarcity

A situation in which the available water resources are insufficient to meet the demands of a region.

Precipitation

Any form of water - liquid or solid - falling from the atmosphere to the Earth's surface, including rain, snow, sleet, and hail.

Evaporation

The process by which water transforms from a liquid to a gas or vapor state, often driven by heat from the sun, playing a critical role in the water cycle.

Drought

An extended duration of significantly reduced precipitation, resulting in a scarcity of water.