When There Exists a Negative Externality in Case of a Particular

question 36

Multiple Choice

When there exists a negative externality in case of a particular good and that is not reflected in the price:

• A)too little of that good is produced and consumed.
• B)too much of that good is produced and consumed.
• C)nothing of that is either produced or consumed.
• D)the government completely prohibits the production of such goods.
• E)the resources are allocated to their highest-valued activity.