If the production of a good causes an external cost, then the efficient quantity is
A) equal to the quantity at which the marginal benefit equals marginal cost.
B) less than the quantity at which the marginal benefit equals the marginal cost.
C) more than the quantity at which the marginal benefit equals the marginal cost.
D) the quantity at which the marginal private benefit is greater than the marginal social benefit.
E) None of the above answers is correct.
B
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The production possibilities curve illustrates all of the following concepts except:
a. the law of increasing costs. b. unlimited wants. c. scarcity. d. opportunity cost. e. availability of resources.
The opportunity cost of an action: a. can be determined by considering the benefits that flow from the action as well as the monetary costs incurred as a result of the action. b. can be determined by adding up the bills incurred as a result of the action
c. can be objectively determined only by economists. d. is a subjective valuation that can be determined only by the individual who chooses the action.