If There Are External Costs of Production and Perfectly Competitive

question 111

Multiple Choice

If there are external costs of production and perfectly competitive firms do not account for these costs, at the equilibrium level of output

• A) P = MC = MSC.
• B) P = MC and P < MSC.
• C) P = MC and P > MSC.
• D) P > MC and P = MSC.

---

Definitions:

Expected Value

Probability-weighted average of the payoffs associated with all possible outcomes.

Expected Returns

The average return an investor anticipates receiving from an investment, taking into account the probability of different outcomes.

Probability

A measure of the likelihood that an event will occur, often expressed as a number between 0 and 1, where 0 means impossibility and 1 indicates certainty.

Expected Income

The forecasted amount of money that an individual or entity anticipates receiving over a certain period.