If the Social Value of Producing a Good Is Always

question 433

Multiple Choice

If the social value of producing a good is always higher than the private value of producing it, then there is a

• A)negative externality associated with the production of the good, and the market equilibrium quantity of the good is less than the socially optimal quantity.
• B)negative externality associated with the production of the good, and the socially optimal quantity of the good is less than the market equilibrium quantity.
• C)positive externality associated with the production of the good, and the market equilibrium quantity of the good is less than the socially optimal quantity.
• D)positive externality associated with the production of the good, and the socially optimal quantity of the good is less than the market equilibrium quantity.

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Definitions:

Profit

The financial gain realized when revenue from business activities exceeds the costs and expenses involved in operating.

Market Rate

The prevailing price or cost of goods, services, wages, or interest rates in the open market.

Natural Gas

A fossil fuel composed mainly of methane, used as an energy source for heating, electricity, and vehicle fuel.

Profit

The financial gain achieved when the revenue from selling goods or services exceeds the costs associated with production and operations.