FIGURE 16- 1

question 14

Multiple Choice

FIGURE 16- 1
-Refer to Figure 16- 1.Suppose that the perfectly competitive market with no government intervention achieves equilibrium at point A.If the social marginal costs and social marginal benefits are represented by MC1 and MB0,respectively,then there exists

• A)no externalities at all.
• B)a negative external benefit.
• C)a positive external cost.
• D)a negative external cost.
• E)a positive external benefit.

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Definitions:

Net Of Tax

This refers to the amount left after taxes have been subtracted from the total or the calculation made taking taxes into account.

Income Statement

A financial statement that shows a company's revenues, expenses, and profits or losses over a particular period of time.

Linkage

The connection or relationship between two or more factors, objects, or systems.

Period Costs

Expenses that are not directly tied to the production of goods and are expensed in the period they are incurred.