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29 Oct 2020

10. Fill in the blank. When a negative externality is present in producing a good or service, ___________ of the good or service will be produced at market equilibrium.

 

 a. too much

 b. too little

 c. the optimal quantity

d. none

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Raushan Raj
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29 Oct 2020

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Related questions

11. An external benefit(positive externality) implies that private markets will provide ____ and an external cost(negative externality) implies that private markets will provide _____ of the good (relative to the social optimum).  

a. too much; too much

b. too little; too little

c. too much; too little

d. too little; too much

6. A perfectly competitive paper mill that produces large amounts of pollution (a negative externality) will, from a social point of view,

a. produce too little paper.

b. produce the socially optimal quantity of paper.

c. produce too much paper.

d. produce too much paper only if it installs pollution control equipment.

When production of a good creates an external benefit:
  1. There is a negative externality. 
  2. It results in the tragedy of the commons. 
  3. There is a positive externality. 
  4. A club good is being produced. 
  5. Too much of the good is being produced. 

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