In a Market Where Negative Externalities Are Associated with Consumption

question 78

Multiple Choice

In a market where negative externalities are associated with consumption and production, the equilibrium will not be efficient because

• A) too few resources will be allocated toward producing the good.
• B) firms will shut down until costs are reduced.
• C) costs of production will, on average, be too high.
• D) too many resources will be allocated toward producing the good.

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Definitions:

Statute Violation

An act or omission that goes against a law enacted by a legislative body, potentially leading to legal penalties.

Enforced Agreements

Contracts or legal agreements that are recognized by law as valid and are subject to enforcement through legal processes.

Legislature

A government agency authorized to create, modify, and abolish regulations within a specified territory.

Divisible

Characterized by being capable of division or separation into distinct and independent parts or portions.