Which of the Following Describes How a Negative Externality Affects

question 65

Multiple Choice

Which of the following describes how a negative externality affects a competitive market?

• A)The externality causes a difference between the private cost of production and the social cost.
• B)The externality causes a difference between the private cost of production and the private benefit from consumption.
• C)The externality causes consumer surplus to exceed producer surplus.
• D)The externality causes a difference between the private cost of production and the equilibrium price.

Identify and analyze the effects of changes in input prices on the cost of production and the firm's input choices.

Apply the concept of cost minimization in determining the optimal combination of inputs for producing a given level of output.

Understand the impact of scale economies and the role of different production technologies on production costs and efficiency.

Calculate and interpret the conditional labor demand function within the context of a firm's production decisions.