If Pollution Is Created When Producing a Product, Then the Market

question 111

Multiple Choice

If pollution is created when producing a product, then the market equilibrium price

• A) is too high and equilibrium quantity is too low.
• B)and equilibrium quantity are too low.
• C)and equilibrium quantity are too high.
• D)is too low and equilibrium quantity is too high.

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Definitions:

Cournot Equilibrium

A state in an oligopoly market where each firm chooses its quantity to maximize its profit, assuming the quantities of its competitors are fixed.

Collude

To engage in secret or illegal cooperation or conspiracy, especially in order to cheat or deceive others.

Stackelberg Duopoly

A model of imperfect competition in which one firm sets its output first, influencing the market response of the other firm.

MR

Marginal Revenue, which is the increase in revenue that results from the sale of one additional unit of a product or service.