When There Is a Negative Externality, the Private Cost of Production

question 116

Multiple Choice

When there is a negative externality, the private cost of production ________ the social cost of production.

• A) is greater than
• B) is equal to
• C) eliminates
• D) is less than

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Definitions:

Net Taxes

The total taxes paid by individuals or businesses after accounting for allowances, deductions, and credits.

Government Outlays

Government outlays refer to the total amount of money spent by the government, including spending on goods and services, transfer payments, and debt interest. This term is synonymous with government spending but emphasizes the outflow aspect.

Government Expenditures

The total amount spent by the government for its operations, projects, and policies, including infrastructure, public services, and social security payments.

Government Revenues

The total income received by the government from taxes and non-tax sources.