When a Negative Externality Is Present in a Market,when a Quota

question 101

Multiple Choice

When a negative externality is present in a market,when a quota is imposed,it is:

• A) efficient, because the market consumes the efficient level.
• B) not efficient, because individuals' net benefits from the amount set by the quota are different.
• C) efficient, because the net benefit of everyone at the amount set by the quota is equal.
• D) not efficient, because the marginal cost outweighs the marginal benefit for too many consumers at the amount set by the quota.

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Definitions:

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