If the Social Cost of Producing a Good or Service

question 9

Multiple Choice

If the social cost of producing a good or service exceeds the private cost,

• A)a positive externality exists.
• B)the sum of consumer surplus and producer surplus is maximised.
• C)the market achieves economic efficiency.
• D)a negative externality exists.

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Definitions:

Federal Government

The national government of a federal state, which holds the authority over matters that affect the entire country, distinct from state or local governments.

Percentage Point

A unit for measuring the difference between percentages, illustrating how much one percentage is higher or lower than another.

Distributed Equally

Refers to an allocation method where resources, wealth, or opportunities are evenly shared among all participants or groups involved.

Pre-Tax-And-Transfer Income

The amount of income individuals or households earn before taxes are deducted and government transfers are added.