-In the Above Figure, If No Government Intervention Occurs, at the Unregulated

question 204

Multiple Choice

-In the above figure, if no government intervention occurs, at the unregulated competitive market equilibrium, there is an

• A) external marginal benefit of $2.
• B) external marginal cost of $2.
• C) external marginal benefit of $1.
• D) external marginal cost of $3.

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Definitions:

Equilibrium Price

The price at which the quantity of a good or service supplied matches the quantity demanded, causing the market to be in a state of balance.

Equilibrium Price

The price at which the quantity of a good or service demanded equals the quantity supplied, leading to a stable market condition without excess supply or demand.

Supply and Demand

Fundamental economic model describing how the price and quantity of a good are determined in a market, based on the relationship between product availability and consumers' desire for it.

Determinant of Demand

A factor that affects the willingness and ability of consumers to buy a product, which can include price, income, tastes, and expectations.