Suppose External Costs Are Present in a Market Which Results

question 60

Multiple Choice

Suppose external costs are present in a market which results in the actual market price of $70 and market output of 150 units. How does this outcome compare to the efficient, ideal equilibrium?

• A) The efficient price would be higher than $70.
• B) The efficient price would be lower than $70.
• C) The efficient price would also be $70.
• D) The efficient output would be greater than 150 units.

---

Definitions:

P-Value

The probability of observing data at least as extreme as the ones observed, under the assumption that the null hypothesis is true.

Explanatory Variable

A variable in a statistical model that is believed to cause or influence changes in a response variable.

Test Statistic

A test statistic is a calculated value from sample data used in hypothesis testing to determine whether to reject the null hypothesis.

Tablet Computer

A portable computing device featuring a touch-sensitive screen as its primary input device.