A difference between economic regulation and social regulation is that
A) the former tends to affect the prices at which products are sold and the latter does not.
B) the former tends to affect the profits of firms and the latter does not.
C) the former tends to be specific to an industry and the latter tends to affect firms in all industries.
D) the former tends to be done at the state level and the latter at the federal level.
Answer: C
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Refer to Figure 5-1. If, because of an externality, the economically efficient output is Q2 and not the current equilibrium output of Q1, what does S2 represent?
A) the market supply curve reflecting marginal social cost B) the market supply curve reflecting implicit cost C) the market supply curve reflecting marginal private cost D) the market supply curve reflecting external cost
Economic efficiency means
A) the same as technical efficiency. B) that all firms within a single competitive industry are producing at the same level of output. C) that it is impossible to increase the output of any good without lowering the total value of the output of the economy. D) that high-tech methods of production are the most efficient.