The Supply and Demand Conditions Facing a Firm That Makes

question 66

Multiple Choice

The supply and demand conditions facing a firm that makes widgets and generates a negative externality by dumping a highly toxic sludge in a nearby river is given in the table below.

The equilibrium price and quantity when only private costs are taken into account are

• A) Price = $55, Quantity = 30
• B) Price = $40, Quantity = 55
• C) Price = $30, Quantity = 20
• D) Price = $30, Quantity = 80

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Definitions:

Imagination

The ability of the mind to be creative or resourceful, forming new ideas or concepts of external objects not present to the senses.