The Diagram Below Shows Demand and Supply Curves for Some

question 99

Multiple Choice

The diagram below shows demand and supply curves for some perfectly competitive market.
FIGURE 16- 2
-For a production process that involves a positive externality,it is true that

• A)marginal social cost is more than marginal private cost.
• B)a subsidy to producers could increase production to the socially optimal level.
• C)a per unit tax could be imposed on the producer to achieve the socially optimal level of production.
• D)marginal social benefit is less than marginal private benefit.
• E)without government intervention the market will produce too much of this good.

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Definitions:

Legally Independent

The status of an entity that operates under its own legal rights and responsibilities, separate from its owners or other entities.

Tax Abatement

A reduction or exemption from taxes granted by a government for certain activities or investments, often used to encourage economic development.

Purposes

The intended or desired outcomes or goals of actions, projects, or entire organizations.

Dollar Amount

Represents a numerical monetary value and is used in financial transactions to indicate the currency value.