When Production of a Good Results in an External Cost

question 5

Multiple Choice

When production of a good results in an external cost, the unregulated competitive market equilibrium is inefficient because

• A) MSC = MC.
• B) MSC = MSB.
• C) MSC > MSB.
• D) MSC < MSB.

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Definitions:

Multinational Organization

is a business entity that operates in multiple countries outside of its original or home country, managing production or delivering services in several countries.

Market Price

The current price at which an asset or service can be bought or sold in a particular market, determined by supply and demand dynamics.

Open Pay System

A compensation strategy where an organization openly shares salary ranges and sometimes individual salaries, aiming for transparency.

Pay Compression

Pay compression occurs when there is only a small difference in pay between employees regardless of their skills, experience, or job responsibilities, often resulting in dissatisfaction among more qualified or experienced employees.