When Farmers Raise Hogs, There Are a Number of External

question 156

Multiple Choice

When farmers raise hogs, there are a number of external costs. In particular, hogs generate methane gas. Without government regulation, the equilibrium price and quantity of pigs raised means that:

• A) too few hogs will be raised.
• B) the price will be less than the marginal social cost.
• C) the price will be less than the marginal benefit.
• D) the price will be less than the marginal cost to hog farmers.

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Definitions:

Consumer Surplus

The separation between the entire amount consumers are keen and financially able to expend on a good or service, and the amount they actually expend.

Surplus I

An excess of supply over demand, leading to a situation where the quantity of a good or service exceeds the quantity demanded at the current price.

Consumer Surplus

The difference between what consumers are willing to pay and what they actually pay for a good or service.

Surplus II

An excess of supply over demand, leading to lower prices and potential inefficiencies in the market.