If an Externality Is Present in a Market, Economic Efficiency

question 6

Multiple Choice

If an externality is present in a market, economic efficiency may be enhanced by

• A)government intervention.
• B)a decrease in foreign competition.
• C)fewer market participants.
• D)weaker property rights.

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Definitions:

ΔTR/Δq

Represents the change in total revenue divided by the change in quantity sold, indicating marginal revenue.

TR/q

Represents Total Revenue divided by quantity, a formula used to calculate average revenue per unit sold.

Short Run

A period during which at least one of a firm's inputs is fixed and cannot be changed.

Average Total Cost

The total cost of production divided by the quantity of output produced, it includes all variable and fixed costs.