FIGURE 16-1 -Refer to Figure 16-1. Suppose That the Perfectly Competitive Market

question 105

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

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Definitions:

Higher Boiling

Referring to a substance with a higher boiling point compared to another substance, often used to differentiate between similar compounds in purification processes.

Ketone

An organic compound characterized by a carbonyl group (C=O) bonded to two carbon atoms.

Acetone

A colorless, volatile, and flammable liquid used as a solvent, known chemically as propan-2-one or dimethyl ketone.

Carbon Atoms

The basic building blocks of organic compounds, characterized by four valence electrons allowing for various bonding configurations.