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:

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The frontal lobes are the part of the brain located at the front of each cerebral hemisphere, responsible for complex cognitive functions, decision making, and controlling voluntary muscle movements.

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A neurotransmitter crucial for mood regulation and the feeling of well-being.

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Sudden Infant Death Syndrome, an unexplained death, usually during sleep, of a seemingly healthy baby less than a year old.

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