If a Negative Externality Prevails in a Competitive Market for Air

question 9

Multiple Choice

If a negative externality prevails in a competitive market for air travel, then:

• A)more than the efficient amount of annual air travel will be consumed in equilibrium.
• B)less than the efficient amount of annual air travel will be consumed in equilibrium.
• C)the marginal social cost of air travel will exceed its marginal social benefit in equilibrium.
• D)both (a) and (c) are correct

---

Definitions:

Zero Defects

A management philosophy aimed at eliminating defects in products or processes through continuous improvement and defect prevention measures.

Open System

A system that interacts with its environment by exchanging energy, materials, or information.

Internal Customers

Individuals or groups within an organization who rely on the support or services of another individual or department within the same organization.

Theory Y

A management assumption that employees are naturally motivated, seek responsibility, and can make thoughtful and beneficial contributions to the organization.