If a Detrimental Externality Is Being Produced in the Course

question 186

Multiple Choice

If a detrimental externality is being produced in the course of producing a good, then

• A) P > MSC.
• B) MSC < MPC.
• C) incidental costs are negative.
• D) output is inefficiently large.

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Definitions:

Value Loss

The reduction in the value of an asset, investment, or product, often due to market changes, deterioration, or obsolescence.

Gift

A voluntary transfer of property or funds from one individual to another without expectation of payment or compensation.

Diamond-Water Paradox

A question in economics that points out the contradiction between the high value of diamonds, which are non-essential, and the low value of water, which is essential for survival.

Marginal Utility

The extra pleasure or benefit derived from using one more unit of a product or service.