When There Is an Externality in the Production of a Good

question 55

Multiple Choice

When there is an externality in the production of a good:

• A) the value that consumers get from consuming the good is equal to the cost of producing the good.
• B) some costs are passed on to individuals not involved in production or consumption.
• C) the market for the good is likely to be perfectly competitive.
• D) resource allocation is likely to be allocatively e?cient.

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Definitions:

Vitiligo

A condition in which the skin loses its pigment cells, resulting in discolored patches.

Papillary Layer

The upper layer of the dermis that contains blood capillaries, sensory neurons, and the bases of the hair follicles.

Dermis

The dermis is the thick layer of living tissue below the epidermis that forms the true skin, containing blood capillaries, nerve endings, sweat glands, hair follicles, and other structures.

Tyrosinase

An enzyme critical in the production of melanin and other pigments from tyrosine by oxidation.