If an External Benefit Is Present in the Consumption of a Good

question 173

Multiple Choice

If an external benefit is present in the consumption of a good or service,then

• A) there can be no external cost.
• B) the marginal social benefit is greater than the marginal private benefit.
• C) the marginal social benefit is equal to the marginal private benefit.
• D) the marginal private benefit is equal to the marginal social benefit plus the marginal external benefit.
• E) the marginal external benefit is equal to the marginal private benefit minus the marginal social benefit.

---

Definitions:

Stagflation

A period of falling output and rising prices.

Hyperinflation

An extremely high and typically accelerating rate of inflation, often exceeding 50% per month.

Long-run Equilibrium

A state in an economy or market where all factors of production are fully utilized, and all prices and quantities have adjusted so that aggregate supply equals aggregate demand.

Inflation Expectations

Consumers' and investors' predictions about future inflation rates, which can influence economic decisions and actual inflation through their impact on wages, prices, and interest rates.