Suppose the Production of a Good Results in Positive Externalities

question 168

Multiple Choice

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

• A)the socially optimal level of output will be produced.
• B)society will incur a net social cost.
• C)society will want less produced, and producers will be willing to satisfy that desire.
• D)there is market failure.

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Definitions:

Daily Settlements

The process by which futures contracts are revalued at the end of each trading day based on the closing market prices to reflect gains and losses.

Sum

The total result of adding two or more numbers or quantities together.

Derivatives Exchanges

Specialized marketplaces where derivatives securities, such as futures and options, are traded.

Electronic Trading

The use of computer systems, often connected to the internet, to execute buy and sell orders in financial markets without the need for a physical trading floor.