An Underallocation of Resources Occurs When

question 42

Multiple Choice

An underallocation of resources occurs when

• A)marginal private benefit exceeds marginal social benefit.
• B)a negative externality in production exists.
• C)a positive externality in consumption exists.
• D)All of these lead to underallocation of resources.

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Definitions:

Domestic Consumption

Domestic Consumption is the total amount of goods and services consumed within a country, excluding those used for exports.

Domestic Price

The price of goods or services within a country's domestic market, as opposed to international or export prices.

Free Trade

Worldwide trade unencumbered by tariffs, quotas, or any form of regulatory constraints.

Frederic Bastiat

A French economist and author known for his theories on economics and his advocacy of free markets and limited government.