Suppose the Production of a Good Results in Positive Externalities

question 119

Multiple Choice

Suppose the production of a good results in positive externalities. If output occurs at the intersection of the marginal social benefits curve and the supply curve, then

• A)output will be at the socially optimal level.
• B)the price of the product will be the same as it was when all benefits were not taken into account.
• C)less output will be produced than if all benefits were not taken into account.
• D)output will be at the market level.

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Definitions:

NPV

Net Present Value, a calculation used to assess the profitability of an investment by summing the present values of its cash inflows and outflows.

Mutually Exclusive

Describes options or decisions that cannot be adopted or pursued at the same time.

Management Accept

The process of corporate leadership approving strategies, initiatives, or decisions based on their alignment with the organization's objectives and resource capabilities.

Required Rate of Return

The lowest yearly return rate on an investment that appeals enough to persuade people or corporations to invest in a specific venture or financial opportunity.