Figure 5-2 Shows a Market with a Negative Externality

question 169

Multiple Choice

Figure 5-2 shows a market with a negative externality.
-Refer to Figure 5-2.The true marginal cost of the last unit produced is represented by the price

• A)Pa.
• B)Pb.
• C)Pc.
• D)Pf.

---

Definitions:

Short Run

A period in economic analysis where at least one input (such as plant size) is fixed and cannot be changed.

Equilibrium Price

The market price at which the quantity of goods supplied equals the quantity of goods demanded.

Minimize Losses

Minimizing losses involves implementing strategies and decisions that reduce the extent of financial loss or damage to the lowest possible level, often through risk management and careful planning.

Maximize Profits

The process by which a company seeks to achieve the highest possible financial gain from its operations and sales.