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.

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Definitions:

Rapidly Rising Costs

A scenario where the expenses of producing goods or services increase significantly in a short period of time.

Unequal Access

A situation where resources, services, or rights are not equally available to all individuals or groups.

Employer-provided

Benefits or services provided by an employer to their employees, which could include healthcare, retirement plans, or education assistance.

Private Health Insurance

Health insurance coverage provided by non-governmental entities, offering various health care benefits based on the plan.