If There Is an External Cost Associated with the Production

question 86

Multiple Choice

If there is an external cost associated with the production or consumption of a good in a competitive industry,then:

• A)the output of the good produced will be too small compared to its demand in the market.
• B)in equilibrium,the social marginal cost of production will be greater than the private marginal benefit to the consumers.
• C)private benefits derived from the consumption of the good will exceed the private cost of producing the good.
• D)the efficient level of output is given by the point where the private marginal cost curve intersects the private marginal benefit curve.

---

Definitions:

Small Business

An independently owned and operated company that is limited in size and revenue, depending on the industry.

Direct SBA Loans

Loans provided directly by the Small Business Administration to small businesses that meet certain qualifications.

Natural Disaster

A sudden and devastating event in nature, such as a hurricane, flood, or earthquake, that causes significant damage or loss.

Energy Conservation

The practice of reducing the use of energy through more efficient systems, processes, or behaviors to preserve resources.