A Monopoly Might Produce Less Than the Socially Optimal Amount

question 51

Multiple Choice

A monopoly might produce less than the socially optimal amount of pollution because

• A) it likes to be a good citizen.
• B) it sets price above marginal cost.
• C) it earns economic profit.
• D) it internalizes the external costs.

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Definitions:

Financial Statements

are formal records of the financial activities and position of a business, individual, or other entity, typically including the balance sheet, income statement, and cash flow statement.

Functional Currency

The primary currency of the primary economic environment in which an entity operates.

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting wear and tear, deterioration, or obsolescence.

Amortization

The process of gradually writing off the initial cost of an asset over a period.