When Production of a Good Generates External Benefits, the

question 26

Multiple Choice

When production of a good generates external benefits, the

• A) demand curve for the good will overstate the true social benefits from consumption of the good.
• B) demand curve for the good will understate the true social benefits from consumption of the good.
• C) supply curve for the good will overstate the true social cost of producing the good.
• D) supply curve for the good will understate the true social cost of producing the good.

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Definitions:

Endorphins

Naturally occurring peptides in the brain that act as neurotransmitters and have pain-relieving properties similar to morphine.

Agitation

A state of anxiety or nervous excitement, often manifesting as restless or tumultuous behavior.

Anxiety

A feeling of worry, nervousness, or unease, typically about an imminent event or something with an uncertain outcome.

Acetylcholine

A neurotransmitter in the brain and peripheral nervous system important for muscle activation, and involved in attention, learning, and memory.