The Efficient Quantity of Output of a Product with External

question 347

Multiple Choice

The efficient quantity of output of a product with external costs of production is

• A) where the demand curve and the producer's supply curve intersect.
• B) where the marginal social cost curve and marginal social benefit curve intersect.
• C) as low as possible.
• D) zero.

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Definitions:

Present Value

A financial concept that discounts future cash flows to their value today, considering the time value of money to assess investment potential.

Resource's Current Price

The present market price of a particular resource or commodity, reflecting its current demand and supply.

Extraction

The process of removing or obtaining a resource, material, or substance from its source or origin.

User Cost

The opportunity cost of using a durable good or natural resource, representing the foregone benefits from not preserving the asset for future use.