When Firms in an Industry Have Fully Internalized a Production

question 94

Multiple Choice

When firms in an industry have fully internalized a production externality,

• A)they produce at less than the optimal level of output.
• B)they produce at more than the optimal level of output.
• C)it is not possible to achieve allocative efficiency.
• D)the marginal social cost is zero.
• E)they bear the entire social marginal cost of production.

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A statistical measure that indicates the extent to which two or more variables fluctuate together.

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A business that prepares and sells food and drinks to customers.

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A small amount of money given to someone as a way of thanking them for their service or advice, or suggestions intended to provide guidance or advice.