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:

Power Cords

Electrical cables that connect an appliance to the main electricity supply, enabling its operation.

Market Wage Rate

The prevailing rate of pay for given work in a specific industry or region, determined by supply and demand for labor.

Profit-Maximizing Quantity

The level of output at which a company can make the highest possible profit, considering its cost structures and market price.

Technological Advance

The process of introducing new technology or improving existing technology which significantly increases efficiency, productivity, or outcomes in various fields.