In the Case of Either a Positive or Negative Externality

question 100

Multiple Choice

In the case of either a positive or negative externality, a good's market price will:

• A)be too low.
• B)be too high.
• C)not fully reflect a good's social marginal cost or social marginal benefit.
• D)not equate the quantity supplied by sellers with the quantity demanded by buyers.

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Definitions:

Long-run Average Cost Curve

A curve that shows the lowest cost at which a firm can produce any given level of output in the long run, when all inputs are variable.

Monthly Production

The total quantity of goods or services produced by a company, industry, or economy over the span of a month.

Production Cost

The total expense incurred in manufacturing a product or offering a service, including raw materials, labor, and overheads.

Learning Curve

A graphical representation showing the rate of improvement in performance or a learning process as a function of experience or the number of trials.