Which of the Following Is True of the Private Level

question 98

Multiple Choice

Which of the following is true of the private level of output of goods with negative externalities?

• A) The private level of output will be lower than the socially-optimal level.
• B) The private firm will produce that level of output where marginal social benefit equals
• C) The private firm will produce that level of output where marginal social cost equals marginal private benefit.
• D) The private level of output will be higher than the socially-optimal level.

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Definitions:

Scarcity

A fundamental economic problem of having seemingly unlimited human wants in a world of limited resources, leading to the necessity of making choices.

Microeconomics

The branch of economics that studies how individuals, households, and firms make decisions and allocate resources.

Alternatives

Options or choices available in any given situation.

Production

The process of creating goods and services through the combination of labor, capital, land, and technology.