The Socially Optimal Level of Output of a Good with an Externality

question 187

Multiple Choice

The socially optimal level of output of a good with an externality occurs when

• A)the marginal private costs of production are equal to marginal private revenues
• B)the firm maximizes its profits
• C)the consumer maximizes his or her utility
• D)the marginal social cost of production equals the marginal social benefit of the good
• E)the firm is making a normal profit

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Definitions:

Correct Answer

The accurate response or solution to a question, problem, or challenge, often determined through factual knowledge or logical deduction.

Milgram Shock Experiment

A series of social psychology experiments conducted by Stanley Milgram, demonstrating individuals' willingness to obey authority figures, even when actions cause harm to others.

Obedience

The act of following orders or directions from an authority figure.

Experimenter

An individual conducting an experiment, especially in scientific research, to test a hypothesis or demonstrate a known fact.