Suppose External Costs Are Present in a Market Which Results

question 20

Multiple Choice

Suppose external costs are present in a market which results in the actual market price of $84 and market output of 320 units. How does this outcome compare to the efficient, ideal equilibrium?

• A) The efficient price would be higher than $84.
• B) The efficient price would be lower than $84.
• C) The efficient price would also be $84.
• D) The efficient output would be greater than 320 units.

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Definitions:

Profit Margin

A financial metric that measures the percentage of revenue that exceeds the cost of goods sold, indicating the profitability of a business.

Revenue Analysis

A process of reviewing and evaluating the income generated from operations, usually to understand financial performance and identify improvement areas.

Strategic Planning

A systematic process for envisioning a desired future and translating this vision into broadly defined goals and a sequence of steps to achieve them.

Marketing Strategy

A comprehensive plan formulated to achieve a company’s marketing goals through specific campaign activities and channels.