If the Market Equilibrium Quantity Is Less Than the Socially

question 18

Multiple Choice

If the market equilibrium quantity is less than the socially optimal quantity, one can infer that:

• A)the private supply curve for the activity is below the socially optimal supply curve.
• B)the private demand curve for the activity is above the socially optimal demand.
• C)there is a positive externality associated with this good.
• D)there is a negative externality associated with this good.

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Definitions:

Impaired Value

The condition in which the market value of an asset is less than its carrying value on the balance sheet.

Interest Revenue

Income earned by an entity through lending funds or depositing funds in interest-bearing accounts.

Warrants

Securities that grant the holder the right to purchase a company's stock at a specific price before the warrant expires, similar to stock options but typically with longer durations.

Par Value

A nominal face value assigned to shares of stock by the issuing company, which often bears no relation to the market value.