Which of the following statements is TRUE of external costs?
A) External costs should not be corrected since people will bear the costs whether they are corrected or not.
B) There are no good ways to correct for the external costs.
C) When external costs exist, the price of the good will be deceptively low leading to an overallocation of resources.
D) External costs should only be corrected for if the correction will not increase the market price.
C
You might also like to view...
Cash equivalents are:
A) assets that do not attract interest, and hence generate no additional revenue. B) a part of a bank's liability. C) the amount of deposits held by the public in a particular bank. D) riskless, liquid assets that banks can immediately access.
Fred's income has just risen from $940 per week to $1,060 per week. As a result, he decides to purchase 9 percent more steak per week. The income elasticity of Fred's demand for steak is
A) 0.75. B) 0.90. C) 1.00. D) 1.33.