In a Market Where Negative Externalities Are Associated with Consumption

question 223

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:

Investment

The allocation of money into financial assets, real estate, or other ventures with the expectation of obtaining additional income or profit.

Interest Earned

The amount of money gained on an investment or savings account over time due to applied interest rates.

Interest Rate

The percentage at which interest is paid by borrowers for the use of money that they borrow from a lender.

Maturity Value

The amount that will be received at the end of a fixed income investment period, such as bonds or certificates of deposit.