In a Competitive Market, If the Production Process Involves an External

question 33

Multiple Choice

In a competitive market, if the production process involves an external cost, such as pollution of the environment, the market will

• A) produce the economically efficient outcome.
• B) result in a market price that is higher than the efficient one.
• C) register a price that is lower than the efficient one.
• D) result in too little of the good being produced compared to the ideal efficient outcome.

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Definitions:

Majority of Voters

Refers to the greater part or more than half of the total number of people who vote in an election or on a specific issue.

Efficient Programs

Initiatives or policies designed to achieve the intended outcomes with minimum waste of resources.

Political Process

The collection of activities that influence the policies, actions, and leadership of a government or society.

Counterproductive Activities

Actions or behaviors that hinder the achievement of a goal or the functioning of a process, often resulting in the opposite of the desired outcome.