Suppose the Actions of the Producers of a Good Impose

question 153

Multiple Choice

Suppose the actions of the producers of a good impose an external cost which results in the actual market price of $18 and market output of 400 units. How does this outcome compare to the efficient, ideal equilibrium?

• A) The efficient price would higher than $18 while the efficient output would be less than 400 units.
• B) The efficient price would be higher than $18 while the efficient output would be greater than 400 units.
• C) The efficient price would be lower than $18 while the efficient output would be less than 400 units.
• D) The efficient price would be lower than $18 while the efficient output would be greater than 400 units.

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Definitions:

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