If a Producer Can Use Resources to Produce Either Good

question 6

Multiple Choice

If a producer can use resources to produce either good A or good B, then A and B are

• A)complements in production.
• B)substitutes in production.
• C)complements in consumption.
• D)substitutes in consumption.

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Definitions:

Environmental Protection Agency

A U.S. federal agency established to coordinate and enforce national pollution control laws and regulations to protect human health and the environment.

Pollution Permits

Allowances given to companies that permit them to emit a certain amount of pollutants; can be bought, sold, or traded.

External Benefit

Positive effects of a transaction or activity on third parties not directly involved in the transaction, which are not reflected in the market price.

Negative Externality

A negative externality is a cost imposed on a third party not involved in the production or consumption of a good or service, such as pollution.