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:

Condition of Sale

encompasses the terms and circumstances under which a transaction happens, including payment terms, delivery dates, warranties, and other agreements between seller and buyer.

Prospect's Request

Refers to the needs or interests expressed by a potential customer regarding a product or service.

Hidden Objections

Hidden Objections are reservations or concerns that a potential buyer has about a product or service that they do not openly express.

Trivial Details

Minor or insignificant facts or aspects that are often deemed not important.