When an External Cost Exists in the Production of a Good

question 260

Multiple Choice

When an external cost exists in the production of a good, firms tend to

• A) under-produce the good since society pays these costs.
• B) over-produce the good.
• C) keep production constant throughout the year.
• D) under-allocate resources to the production of the good.

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Definitions:

Ordinal Scale

A measurement scale that categorizes variables or responses in a specific order without defining the exact difference between them.

Median

The middle value in a data set, arranged in ascending or descending order.

Central Tendency

A statistical measure that identifies a single value as representative of an entire distribution of data, typically the mean, median, or mode.

Measure Represent

To symbolize or stand in for a specific attribute or set of data through numerical or other forms of quantification.