In a Competitive Market, If the Production Process Involves an External

question 33

Multiple Choice

In a competitive market, if the production process involves an external cost, such as pollution of the environment, the market will

• A) produce the economically efficient outcome.
• B) result in a market price that is higher than the efficient one.
• C) register a price that is lower than the efficient one.
• D) result in too little of the good being produced compared to the ideal efficient outcome.

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Definitions:

Number of Commercial Bakers

The number of commercial bakers refers to the total count of businesses or individuals that produce and sell baked goods on a large scale.

Income

The money received by a person or entity, typically in exchange for providing labor, goods, or services, or through investing.

Output Standards

Specific, measurable performance targets that outline the expected results of an employee's output, ensuring productivity and quality.

Input Standards

Benchmarks or criteria set for the quality or quantity of inputs (material, information, etc.) required in a process.