Relating to the Economics in Practice on Page 330: by Not

question 152

Multiple Choice

Relating to the Economics in Practice on page 330: By not factoring in the external costs on society resulting from an environmental disaster caused by a specific firm, the firm will most likely ________ its product, and at equilibrium, the marginal social costs of production will be ________ the price.

• A) overproduce; less than
• B) overproduce; greater than
• C) underproduce; less than
• D) underproduce; greater than

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Definitions:

Resource Availability

The extent to which inputs required for production, such as raw materials, labor, and capital, are readily obtainable in the economy or market.

Technological Capabilities

The skills, knowledge, tools, and processes available to an individual, organization, or society that enable technological developments or innovations.

Comparative Advantage

The capacity of a person, business, or nation to create a product or offer a service at a reduced opportunity cost compared to their rivals, thereby gaining specialized production and advantages in trade.