When a business produces a product that creates external costs
A) the company produces a level of output larger than would be produced without the external cost.
B) the company produces a level of output smaller than would be produced without the external cost.
C) the company produces a level of output which would be the same as it would produce without the external cost.
D) the market provides the efficient level of output even with the existence of the external cost.
A
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A firm's marginal cost can always be thought of as the change in total cost if
A) the firm produces one more unit of output. B) the firm buys one more unit of capital. C) the firm's average cost increases by $1. D) the firm moves to the next highest isoquant.
Which of the following statements about a price system is TRUE? I. Prices ration goods and services. II. Prices indicate relative scarcity
A) I only B) II only C) Both I and II D) Neither I nor II