Negative Externalities Arising from the Production of a Good

question 178

Multiple Choice

Negative externalities arising from the production of a good

• A)cause an increase in the demand for the good.
• B)cause a decrease in the demand for the good.
• C)impose costs on third parties.
• D)bring private costs into equality with social costs.

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Definitions:

Perfectly Inelastic

A market condition where the quantity demanded or supplied does not change in response to price changes; the demand or supply curve is perfectly vertical.

Relatively Elastic

Describes a situation where a small change in price leads to a significant change in quantity demanded or supplied.

Marginal Revenue

The additional income received from selling one more unit of a good or service, vital for decision-making in firms.

Total Revenue

The overall amount of money received by a firm from selling its goods or services, calculated by multiplying the price by the quantity sold.