The Socially Optimal Level of Output of a Good That

question 64

Multiple Choice

The socially optimal level of output of a good that generates an externality occurs when _____

• A)the marginal private cost of production equals marginal private revenue.
• B)the firm maximizes its profits.
• C)the marginal private cost of production exceeds the marginal social cost of production.
• D)the marginal social cost of production equals the marginal social benefit of production.
• E)the marginal private cost of the good equals the marginal social benefit of the good.

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Definitions:

Taco Shops

Restaurants or food outlets specializing in serving tacos and related Mexican cuisine, often characterized by their variety and regional flavors.

Equilibrium Price

The price point at which the supply of goods matches demand, leading to a stable market condition.

Income

The financial gain received from labor, capital, or the management of assets, usually measured over a certain period of time.

Tortilla Chips

A type of snack food made from corn tortillas cut into wedges and then fried or baked.