In a Market Where Negative Externalities Are Associated with Consumption

question 223

Multiple Choice

In a market where negative externalities are associated with consumption and production, the equilibrium will not be efficient because

• A)too few resources will be allocated toward producing the good.
• B)firms will shut down until costs are reduced.
• C)costs of production will, on average, be too high.
• D)too many resources will be allocated toward producing the good.

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Definitions:

Quarterly

Pertaining to a three-month period or occurring every three months, often used in the context of financial reporting and dividend payments.

Compounded Quarterly

The process of calculating interest and adding it to the account balance four times a year, resulting in exponential growth.

Semi-Annually

Pertaining to an event or calculation that occurs twice a year or every six months.