If Negative Externalities Are Created in the Production of a Good

question 58

Multiple Choice

If negative externalities are created in the production of a good, then society will:

• A)produce too much of the good since the marginal private cost to firms is less than the marginal social cost.
• B)produce too little of the good since the marginal private cost to firms is less than the marginal social cost.
• C)produce too much of the good since the marginal private cost to firms is greater than the marginal social cost.
• D)produce too little of the good since the marginal private cost to firms is greater than the marginal social cost.
• E)always produce the most efficient quantity of output.

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Definitions:

Growth Pattern

The specific way in which an economic entity or biological organism grows over time, often analyzed to predict future developments.

Deforestation

The clearing or removal of forests or trees from land which is then converted to non-forest use.

Fishery Collapse

A situation where fish populations decline to unsustainable levels, leading to a significant reduction or cessation of fishing activities in the affected area.

Property Rights

Legal rights to possess, use, and dispose of assets including real estate, personal property, and intellectual property.