If the Production of a Good Created Both External Costs

question 83

Multiple Choice

If the production of a good created both external costs and external benefits, but the external costs were greater, without government intervention, a market economy will:

• A)​not produce the product at all.
• B)​overproduce the product.
• C)​underproduce the product.
• D)​produce the optimal amount of the product.

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Definitions:

Establishing Process

The act of creating or instituting a procedure or system within an organization to achieve certain goals.

Ultimatums

A final demand or statement of terms, the rejection of which will result in retaliation or a breakdown in relations.

Irrational Behavior

Actions or decisions that do not follow logical reasoning, typically influenced by emotions, misconceptions, or psychological biases.

Sympathetic Behavior

Actions demonstrating understanding, compassion, or support towards others' feelings or situations.