In a Market Where There Are External or Negative Externalities

question 32

Multiple Choice

In a market where there are external or negative externalities associated with consumption and production, the equilibrium will not be efficient because:

• A)price will be greater than MC.
• B)firms will shut down until costs are reduced.
• C)costs of production will, on average, be too high.
• D)too many resources will be allocated to production of the good.

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Definitions:

Sudden Infant Death Syndrome

A mysterious and tragic condition where an apparently healthy infant dies unexpectedly, usually during sleep, and without a clear cause.

Medulla

A part of the brain stem that regulates vital and automatic functions such as breathing and the sleep-wake cycle.

Serotonin

A neurotransmitter that is involved in mood disorders such as depression.

Sudden Infant Death Syndrome

An unexplained death, usually during sleep, of a seemingly healthy baby less than a year old, also known as crib death.