In a Market Where There Are External or Spillover Costs

question 72

Multiple Choice

In a market where there are external or spillover costs associated with consumption and production,the equilibrium will not be efficient because:

• A) price will be greater than MC.
• 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 to production of the good.

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Definitions:

Individual Needs

The specific physical or psychological desires or necessities of a person that motivate behavior towards their fulfillment.

Psychological State

A person's mental and emotional condition at a given time, influenced by various factors such as environment, genetics, and personal experiences.

Autonomy

The degree of freedom and independence an individual or entity has to make decisions and take actions.

Core Characteristic

The fundamental attribute or quality that defines the essence of something or someone.