In a Free Market Where a Firm's Activity Causes Detrimental

question 76

Multiple Choice

In a free market where a firm's activity causes detrimental externalities,

• A)marginal benefits will be less than marginal social costs.
• B)smaller outputs than those that maximize profits will be socially desirable.
• C)marginal social cost will be greater than marginal private cost.
• D)All of the above are correct.

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Definitions:

Short Interest

The overall sum of shares in a certain stock that have been shorted by investors and still haven't been covered or concluded.

Odd-lot Trading

The buying or selling of stocks in quantities that are less than the standard trading unit or lot prescribed by a stock exchange.

Mental Accounting

A behavioral economics concept describing how people categorize and utilize money differently based on subjective criteria, often leading to irrational financial decisions.

Dividend Income

Income received from holding shares in a company, distributed out of the company’s profits.