Suppose That Cookie Producers Create a Positive Externality Equal to $2

question 3

Multiple Choice

Suppose that cookie producers create a positive externality equal to $2 per dozen. What is the relationship between the equilibrium quantity and the socially optimal quantity of cookies to be produced?

• A)They are equal.
• B)The equilibrium quantity is greater than the socially optimal quantity.
• C)The equilibrium quantity is less than the socially optimal quantity.
• D)There is not enough information to answer the question.

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Definitions:

Lower Eyelid

The lower portion of skin and tissue that covers and protects the eye; essential in the blink reflex and helps maintain eye moisture.

Sublingual Nitroglycerin

A medication used to relieve chest pain (angina) by dissolving under the tongue for rapid absorption into the bloodstream.

Swallowing

The process by which food moves from the mouth to the stomach through coordinated muscle contractions.

Aspiration Risk

The potential for breathing in foreign objects or liquids into the lungs.