When a Negative Externality Exists in a Market,how Does the Cost

question 177

Multiple Choice

When a negative externality exists in a market,how does the cost to producers compare with the cost to society

• A)The cost to producers will be greater than the cost to society.
• B)The cost to producers will be the same as the cost to society.
• C)The cost to producers will be less than the cost to society.
• D)The cost to producers and society will be different, regardless of whether an externality is present.

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Definitions:

Production Function

This concept illustrates how varying amounts of input factors affect the level of production output, showcasing how efficiency can be maximized with certain combinations of inputs.

Output

The quantity of goods or services produced in a given time period by a firm, industry, or country.

Production Function

A mathematical model that describes the relationship between input resources and the output of goods or services produced.

Inputs

Resources used in the production process to generate outputs, including labor, capital, and materials.