When Firms in an Industry Have Fully Internalized a Production

question 94

Multiple Choice

When firms in an industry have fully internalized a production externality,

• A)they produce at less than the optimal level of output.
• B)they produce at more than the optimal level of output.
• C)it is not possible to achieve allocative efficiency.
• D)the marginal social cost is zero.
• E)they bear the entire social marginal cost of production.

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Definitions:

Motivation Depletion

The reduction or exhaustion of an individual's motivation, making it harder to engage in or initiate actions towards goals.

Extrinsic Evaluation

The assessment of something based on external factors or outcomes rather than its inherent value or quality, often influenced by rewards or punishments.

Career Classification

A system or method for organizing and categorizing occupations and professions based on characteristics, such as industry or required skills.

Status

A person's position or rank in relation to others, often determined by social or professional factors.