If There Are Negative Externalities in Production or Consumption, Competitive

question 27

True/False

If there are negative externalities in production or consumption, competitive equilibrium is unlikely to be Pareto efficient but positive externalities enhance the efficiency of the market.

---

Definitions:

Break-even Point

The point at which total costs and total revenues are equal, meaning there is no profit or loss.

Unit Selling Price

The amount of money charged for one unit of a product or service.

Unit Variable Cost

The cost associated with producing one additional unit of a product, which can vary with the level of production output.

Fixed Costs

Expenses that do not change with the level of production or sales activity, such as rent, salaries, and insurance.