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:

Anticipatory Breach

A situation in contract law where one party shows intent not to fulfill their contractual obligations before the due performance.

Third Party

An individual or group aside from the two primarily involved in a situation, often providing services, intervening, or affected by the actions of the main parties.

Original Parties

The entities or individuals who enter into a contract or legal agreement initially, before any assignments or transfers.

Fundamental Breach

A severe violation of a contract that permits the aggrieved party to terminate the agreement and possibly seek compensation for damages.