When marginal private cost is equal to marginal social cost,
A. the activity in question generates no positive externality.
B. the activity in question generates no negative externality.
C. all positive externalities have been internalized.
D. all negative externalities have been internalized.
E. b or d
Answer: E
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When the price of a cup of coffee falls from $3.00 to $2.50, the quantity demanded increases from 1,000 per month to 1,150 per month. Using the midpoint method, the price elasticity of demand is
A) 0.77. B) 1.30. C) 0.07. D) 3.00. E) 2.50.
If nothing else changes, the ________ the current exchange rate, the ________ is the expected profit from holding dollars, all other things remaining the same
A) higher; larger B) lower; smaller C) lower; larger D) The premise of the question is wrong because the exchange rate has nothing to do with expected profit from holding dollars.