Assume That Production of a Good Imposes External Costs on Others

question 217

Multiple Choice

Assume that production of a good imposes external costs on others. The equilibrium price will be ____ and the equilibrium quantity ____ for efficient resource allocation.

• A)​too high; too high.
• B)​too high; too low.
• C)​too low; too high.
• D)​too low, too low.

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Definitions:

Teotihuacán

An ancient Mesoamerican city located in the Basin of Mexico, known for its pyramids and complex urban layout, significant in pre-Columbian history.

Pilgrimage Site

A location of great spiritual significance to which believers travel in order to perform religious practices or rituals.

Division of Labor

An economic concept where production tasks are divided among different individuals or groups, leading to specialization and increased efficiency.

Mesoamerican Societies

Ancient civilizations that existed in the Mesoamerican region before the Spanish colonization of the Americas, including the Aztec, Maya, and Olmec among others.