Suppose the Actions of the Producers of a Good Impose

question 85

Multiple Choice

Suppose the actions of the producers of a good impose an external cost which results in the actual market price of $25 and market output of 1,000 units. How does this outcome compare to the efficient, ideal equilibrium?

• A) The efficient price would higher than $25 while the efficient output would be less than 1,000 units.
• B) The efficient price would be higher than $25 while the efficient output would be greater than 1,000 units.
• C) The efficient price would be lower than $25 while the efficient output would be less than 1,000 units.
• D) The efficient price would be lower than $25 while the efficient output would be greater than 1,000 units.

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Definitions:

Revenue

The entire financial income obtained from transactions involving the sale of products or the provision of services central to an organization's main operations.

Income Elasticity

A measure of how the demand for a good or service changes with a change in consumers' income.

Mobile Service

Telecommunication services provided through a network of base stations, enabling users to maintain communication without a fixed connection point.

Average Income

The mean income of a group, calculated by dividing the total income of the group by the number of individuals or entities in that group.