An External Cost in the Production of a Good Creates

question 71

Multiple Choice

An external cost in the production of a good creates a difference between the
i.costs borne by the producer and the costs borne by society in general.
ii.efficient quantity of output and the equilibrium quantity of output.
iii.marginal social cost and the marginal private cost.

• A) i only
• B) iii only
• C) ii and iii
• D) i, ii, and iii
• E) i and iii

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Definitions:

Scatter Diagram

A graphical representation used to visualize the relationship between two quantitative variables, showing correlation patterns.

Cost

The value, measured in monetary terms, required to gain something or what is spent in order to buy, make, or achieve something.

Level Of Activity

A measure of the volume of production or operations, often influencing costs and profits in businesses.

Economic Plausibility

The degree to which economic theories or assumptions are realistic and make sense in real-world conditions.