In a Market in Which Firms Are Able to Reduce

question 51

Multiple Choice

In a market in which firms are able to reduce their private costs by shifting costs onto others, _____.

• A)there will be underproduction of a good
• B)there will be positive externalities in production
• C)the market prices of goods produced by firms will be too low relative to the social optimum
• D)output of the good being produced will be too high relative to the social optimum
• E)the intersection of the demand curve and the social cost of production curve will determine the equilibrium quantity

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Definitions:

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