Suppose That a Negative Externality Is Created by the Production

question 350

Multiple Choice

Suppose that a negative externality is created by the production of good X. Which of the following statements is correct?

• A)The social cost of producing good X includes the private cost plus the cost to bystanders of the externality.
• B)The increased social cost can be graphed as a decrease in demand.
• C)The market equilibrium quantity will be the socially optimal quantity as long as the government does not interfere.
• D)Both a and b are correct.

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Definitions:

Negative View

A pessimistic perspective that focuses on the drawbacks or unfavorable aspects of something.

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The degree to which a measurement or calculation represents the true value or intended result without error or deviation.

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A measure of a person's intellectual capabilities relative to others, typically quantified as a number derived from standardized tests.

Media Assertion

The act of stating something strongly and publicly by the media.