Consider Two Goods--One That Generates External Benefits and Another That

question 70

Multiple Choice

Consider two goods--one that generates external benefits and another that generates external costs. A competitive market economy would tend to produce

• A) too much of both goods.
• B) too little of both goods.
• C) too much of the good that generates external benefits and too little of the good that generates external costs.
• D) too little of the good that generates external benefits and too much of the good that generates external costs.

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Definitions:

Limited Liability Partnership

A partnership where some or all partners have limited liabilities, meaning they are not personally responsible for the debts of the business.

Capital Contributions

Funds or assets contributed to a partnership or corporation by its owners or partners to support its operations or finance its objectives.

Negligence

The failure to exercise the care that a reasonably prudent person would exercise in like circumstances, resulting in harm or damage to another.