In the Case of a Negative Externality, the Socially Optimal

question 90

Multiple Choice

In the case of a negative externality, the socially optimal output naturally exists if

• A)the external costs associated with the negative externality are extremely small.
• B)the external costs divided by price is equal to price divided by marginal private cost.
• C)there are no free riders.
• D)the public good aspects of the negative externality outweigh the costs incurred by the negative externality.
• E)none of the above

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