When Negative Externalities Are Connected with the Production of a Good

question 117

Multiple Choice

When negative externalities are connected with the production of a good,

• A)market output will be greater than the socially optimal output.
• B)private costs and social costs are equal.
• C)the government should subsidize the production of the good.
• D)there will be a shortage of the good.

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Definitions:

Low-Cost

A pricing strategy or characteristic indicating that something is relatively inexpensive or cheaper than alternatives.

Economies Of Scale

The cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.

Attracting New Buyers

The strategies and practices employed by businesses to appeal to and engage individuals or entities that have not previously purchased their products or services.

Repeat Buyers

Consumers who make multiple purchases from the same brand or vendor, demonstrating brand loyalty or satisfaction with the product or service.