If a Good Has an External Cost, the

question 149

Multiple Choice

If a good has an external cost, the

• A) marginal private cost reflects the external cost.
• B) competitive market outcome is inefficient.
• C) competitive market outcome is efficient.
• D) marginal private benefit is equal to the marginal social cost.

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Definitions:

Plaintiff's Negligence

A legal concept in personal injury cases where the plaintiff's own negligent actions contributed to their harm or loss.

Product Misuse

A defense against product liability that may be raised when the plaintiff used a product in a manner not intended by the manufacturer. If the misuse is reasonably foreseeable, the seller will not escape liability unless measures were taken to guard against the harm that could result from the misuse.

Defense

Legal strategies and arguments used by a defendant in litigation to counteract the claims made by the plaintiff.

Product Liability

Refers to the legal responsibility of manufacturers and sellers to compensate for harm caused by defective products they market.