If the Production of a Certain Commodity Generates External Benefits

question 9

Multiple Choice

If the production of a certain commodity generates external benefits for those who do not participate directly in the production process,then:

• A)too large a quantity of the good will be produced.
• B)at equilibrium,the marginal social benefit is less than the cost of producing an extra unit.
• C)the government can subsidize consumption of the good and improve efficiency.
• D)a government intervention in this market will cause the marginal social benefit to exceed the marginal social cost.

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Definitions:

Rationalization

The process of replacing traditional and emotional thought with reason and practicality, often in the context of industry and bureaucracy.

Culture

The shared beliefs, customs, practices, and social behavior of a particular nation or people.

Evolutionary Psychology

A theoretical approach in psychology that attempts to explain useful mental and psychological traits—such as memory, perception, or language—as adaptations, i.e., as the functional products of natural selection.

Genetic Differences

are variations in the DNA sequences among individuals, which contribute to the diversity in physical traits and susceptibilities to certain diseases.