Many Detrimental Externalities Occur Because

question 96

Multiple Choice

Many detrimental externalities occur because

• A)persons do not pay the full social cost of using a resource.
• B)persons do not pay the full private cost of using a resource.
• C)companies do not pay the market price for natural resources.
• D)companies pay more than the full social cost of using a resource.

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Definitions:

AVC

Average Variable Cost, which is the variable cost per unit of output, calculated by dividing total variable costs by the quantity of output.

ATC

Average Total Costs, which is the sum of all production costs (fixed and variable) divided by the quantity of output produced, detailing the average cost per unit of output.

Economic Conditions

The state of an economy at a given time, encompassing factors such as inflation, unemployment rates, and GDP growth.

Decreasing-Cost Industry

An industry where average costs of production decrease as the industry grows and output increases, due to factors like technology improvements or economies of scale.