When marginal private benefit is equal to marginal private cost,
A. the activity in question generates no negative externality.
B. all negative externalities have been internalized.
C. all positive externalities have been internalized.
D. all of the above
E. a or b
Answer: C
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Consider the following information regarding a person's decision to go to college: college tuition is $20,000 per year, room and board is $10,000 per year, and books and materials are $2,000 per year. Suppose that instead of going to college this person could have earned $18,000 working in a store. An economist would calculate the cost of going to college as
a. $20,000. b. $30,000. c. $32,000. d. $50,000. e. $18,000.
For a given downward-sloping demand curve, a decrease in supply will cause a(n):
a. increase in quantity demanded. b. decrease in quantity demanded. c. decrease in the equilibrium price. d. increase in demand. e. increase in the equilibrium quantity.