If the Production of a Good Generates a Detrimental Externality

question 193

Multiple Choice

If the production of a good generates a detrimental externality, then at that level of production of the good under perfect competition,

• A)MU = MSC.
• B)P < MPC.
• C)MPC < MSC.
• D)MPC > MSC.

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Definitions:

Limited Liability Company

A company formation that merges the direct tax obligations of a partnership or a sole proprietorship with the protection against personal liability offered by a corporation.

Ease of Formation

The relative simplicity and lack of complication in legally establishing a new business or company.

General Partnership

A business arrangement where two or more individuals manage and operate a business in accordance with the terms and objectives set out in a Partnership Agreement.

Limited Liability Partnership

A business entity where partners have limited liabilities, protecting their personal assets from business debts.