If the External Costs of Production Are Not Taken into Account

question 183

Multiple Choice

If the external costs of production are not taken into account, then production will

• A) be less than socially desirable.
• B) be more than socially desirable.
• C) be the same since only prices are affected by externalities.
• D) cease.

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Definitions:

Profitable

refers to a financial state where income exceeds expenses, leading to a positive net outcome.

Discounted Future Profits

The present value of the expected future earnings of a company, discounted at an appropriate rate to account for risk and time.

Antitrust Enforcement

The regulation and actions taken by the government to prevent monopolies and promote competition in the marketplace.

Vertical Relationships

Interactions and agreements between businesses at different stages of the production process, like suppliers and retailers.