If Companies That Were Creating Pollution Had to Pay the Social

question 94

Multiple Choice

If companies that were creating pollution had to pay the social cost of production,they would want to supply:

• A) more at any given price.
• B) less at any given price.
• C) the same amount at the equilibrium price.
• D) the same amount at any given price.

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Definitions:

Marginal

Term used to describe the effects of a change in the current situation. For example, a producer’s marginal cost is the cost of producing an additional unit of a product, given the producer’s current facility and production rate.

Average Increasing

A situation in which the average cost of production goes up as the quantity produced increases.

Long-run Average Total Cost

The average cost per unit of output produced over a period during which all inputs, including capital, are variable.

Diseconomies of Scale

The situation in which a business experiences an increase in average costs per unit when output is increased beyond a certain point.