In the Case of a Negative Externality, the Entire Marginal

question 62

Multiple Choice

In the case of a negative externality, the entire marginal social cost curve lies

• A)below the entire marginal private cost curve by the amount of the external costs associated with the negative externality.
• B)below the entire demand curve by the amount of the external costs associated with the negative externality.
• C)above the entire marginal private cost curve by the amount of the external costs associated with the negative externality.
• D)above the entire demand curve by the amount of the external costs associated with the negative externality.
• E)none of the above

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Definitions:

Market's Output

The total quantity of goods and services produced and offered for sale in a market during a specific period of time.

Internalized

Describes a process or value that has been incorporated within an individual's psychological framework and is reflected in their behavior or decision-making.

Equilibrium Quantity

The quantity of goods or services traded in a market at the equilibrium price, where the quantity supplied equals the quantity demanded.

External Cost

A cost borne by someone who does not participate in the transaction or decision that led to the cost, often associated with negative externalities.