If the External Costs Exceed the Consumer and Producer Surplus

question 93

Multiple Choice

If the external costs exceed the consumer and producer surplus from consuming a good, then the

• A) production level should fall to zero.
• B) production level should fall to the minimum of the average variable cost curve.
• C) production level should fall to the minimum of the average cost curve.
• D) positive externalities will lead to less of this product being produced than is socially optimal.

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A guarantee that a product will meet reasonable consumer expectations of quality and suitability for use as sold.

Express Warranty

A formal declaration by a seller or manufacturer promising the quality and reliability of a product, explicitly stated in a contract or agreement.

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