If a Positive Externality Prevails in the Market for Smoke

question 38

Multiple Choice

If a positive externality prevails in the market for smoke detectors, then when the market is in equilibrium,

• A)the marginal social benefit of smoke detectors exceeds the marginal social cost.
• B)the marginal social cost of smoke detectors exceeds the marginal social benefit.
• C)the marginal social cost of smoke detectors is equal to the marginal social benefit.
• D)more than the efficient amount of smoke detectors is sold.

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Definitions:

Marijuana

A psychoactive drug from the Cannabis plant used for medical or recreational purposes, known for containing THC among other cannabinoids.

Data

factual information or measurements collected for analysis, reference, or reasoning, used in making decisions or determining conclusions.

THC

Tetrahydrocannabinol, the psychoactive compound found in cannabis plants that is responsible for most of marijuana's psychological effects.

Hashish

A drug made from the resin of the cannabis plant, known for its psychoactive effects.