Suppose the Production of a Good Results in Positive Externalities

question 120

Multiple Choice

Suppose the production of a good results in positive externalities. If output occurs at the intersection of the marginal social benefits curve and the supply curve, then

• A)output will be at the socially optimal level.
• B)the price of the product will be the same as it was when all benefits were not taken into account.
• C)more output will be produced than if all benefits were not taken into account.
• D)a and c
• E)a, b, and c

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Definitions:

Imaginary Audience

A psychological concept describing a phenomenon where an individual imagines and believes that multitudes of people are eagerly listening to or watching them, a common occurrence during adolescence.

Personal Fable

A cognitive distortion commonly found in adolescence, where an individual believes they are unique and invulnerable to risks.

Self-Reliance

The reliance on one's own powers and resources rather than those of others.

Authoritative Parenting

Style of parenting in which parent combines warmth and affection with firm limits on a child’s behavior.