Suppose That One Firm Produces a Product That Results in Negative

question 287

Multiple Choice

Suppose that one firm produces a product that results in negative external costs to society. This information suggests that

• A) resources are under-allocated to the firm.
• B) the equilibrium market price of the product includes the external costs borne by society.
• C) resources are over-allocated to the firm.
• D) at the market price, quantity demanded is less than quantity supplied.

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Definitions:

Trademarks

Symbols, words, or phrases legally registered or established by use as representing a company or product, protecting the brand's identity.

Patents

are legal documents that grant inventors exclusive rights to their inventions, preventing others from making, using, or selling the invention without permission.

Lower Wages

The act of paying workers less than the average or expected amount for their labor.

South America

A continent located in the Western Hemisphere, mostly in the Southern Hemisphere, comprising twelve countries and known for its diverse landscapes and cultures.