Which of the Following Is a Likely Consequence of a Negative

question 21

Multiple Choice

Which of the following is a likely consequence of a negative externality, given that the market is allowed to operate freely?

• A) An efficient allocation of resources
• B) Production of less than the socially efficient quantity of the good
• C) Production of more than the socially efficient quantity of the good
• D) Social costs that are equal to private costs
• E) Marginal private cost exceeding marginal social cost at the market equilibrium quantity

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Definitions:

Supermarket Chains

Large retail organizations consisting of multiple supermarket locations, offering a wide variety of food and household products.

Type of Item

Refers to the categorization or classification of an item based on its attributes, purpose, or other distinguishing characteristics.

Blocking

A technique used in experimental design to minimize the effects of variable confounding by grouping similar experimental units together and randomly assigning treatments within these blocks.

Incentive

A positive or negative environmental stimulus that motivates behavior.