If an External Cost Is Present in a Market, Economic

question 209

Multiple Choice

If an external cost is present in a market, economic efficiency may be enhanced by:

• A) increased competition.
• B) weakening property rights.
• C) better informed market participants.
• D) government intervention.

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Definitions:

Isocost Curves

Lines on a graph that represent combinations of inputs (like labor and capital) that have the same total cost.

Marginal Rate

The rate at which a certain quantity changes with respect to a change in another quantity, often used in the context of taxes or production costs.

Cost Minimizing

The strategy or process of reducing expenses to the lowest possible level while maintaining the desired level of production quality or service.

Inputs

The resources such as labor, materials, and capital used in the production process.