When a Competitively Produced Product Has Negative Externalities in Production,the

question 33

Multiple Choice

When a competitively produced product has negative externalities in production,the industry will

• A)overproduce the good because marginal social cost will exceed marginal social benefit in competitive equilibrium.
• B)overproduce the good because marginal private cost is less than marginal private benefit in competitive equilibrium.
• C)underproduce the good because marginal social cost will exceed marginal social benefit in competitive equilibrium.
• D)underproduce the good because marginal private social cost is less than marginal private benefit in competitive equilibrium in competitive equilibrium.

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Definitions:

Asset Turnover

A financial ratio that measures the efficiency of a company's use of its assets in generating sales revenue.

Return On Assets

A financial ratio that measures the efficiency of a company's assets in generating profit, calculated as net income divided by total assets.

Estimated Residual Value

The anticipated value of an asset at the end of its useful life.

Restatement

The revision and republication of one or more of a company's previous financial statements to correct an error.