When Social Costs of Producing or Consuming a Good Exceed

question 110

Multiple Choice

When social costs of producing or consuming a good exceed private costs:

• A)a positive externality exists.
• B)an inefficiently high quantity of a good will be produced and consumed.
• C)the direct consumers of the good will bear the external costs.
• D)the individuals involved in the production of the good do not bear the private costs.
• E)the quantity of the good produced will be less than the socially efficient level.

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Definitions:

Financial Asset(s)

Instruments such as stocks, bonds, or bank deposits that hold monetary value and can be traded in financial markets.

Corporate Shareholders

Individuals or entities that own shares in a corporation, giving them a claim on a portion of its assets and earnings.

Incompetent Management

Refers to a scenario where corporate or organizational leaders lack the skills, abilities, or judgment to make effective decisions, often leading to poor performance.

Proxy Fights

Strategies employed by shareholders to influence company management and policies by voting on corporate issues, often seen in contests for control of the board.