When There Is Negative Externality in Production

question 34

Multiple Choice

When there is negative externality in production,

• A)marginal social benefit exceeds marginal private benefit.
• B)marginal private benefit exceeds marginal social benefit.
• C)marginal social cost exceeds marginal private cost.
• D)marginal private cost exceeds marginal social cost.

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Definitions:

Scientific Discoveries

are findings or breakthroughs that significantly advance knowledge, often leading to new technologies, methods, or understandings in various fields.

Industrial Policy

Government strategies aimed at improving the competitive position and capabilities of domestic industries and firms.

Taxes, Subsidies, and Regulations

These are tools used by governments to influence economic activity. Taxes are levies on income or purchases, subsidies provide financial support, and regulations set rules for how businesses can operate.

Specific Industries

Specific Industries are distinct sectors of the economy that produce or handle similar types of goods and services, such as the automotive or technology industries.