Which of the Following Statements Is Not True

question 4

Multiple Choice

Which of the following statements is not true?

• A) If marginal social cost and marginal private cost are the same, any externality that exists will be positive.
• B) If marginal externality costs are not zero, externalities exist.
• C) An expansion of property rights to include air quality and scenic beauty would bring some private markets close to a socially optimal equilibrium.
• D) The existence of pollution as the byproduct of a production or exchange process indicates a market failure.
• E) When municipal water supplies have heavy concentration of agricultural chemicals, it is probable that agricultural output from the area is produced in quantities greater than the socially optimal level.

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Definitions:

Tax Revenues

Tax revenues refer to the income that is collected by the government from individuals and businesses, primarily through taxes such as income tax, sales tax, and property tax.

Government Spending

Government spending encompasses all the expenditures of government agencies and departments, including investments, consumption, and transfers, aimed at achieving economic and social objectives.

Cyclically Balanced Budget

A budget philosophy calling for budget deficits during recessions to be financed by budget surpluses during expansions.

Business Cycle

The variation in economic performance experienced by an economy over time, characterized by periods of growth and decline.