When the Production of a Good Has an External Cost

question 109

Multiple Choice

When the production of a good has an external cost, the

• A) marginal social cost curve lies below the marginal private cost curve.
• B) marginal social benefit curve lies above the marginal private benefit curve.
• C) equilibrium quantity in an unregulated, competitive market has a marginal social cost greater than the marginal social benefit.
• D) equilibrium quantity in an unregulated, competitive market has a marginal social cost less than the marginal social benefit.