When an external cost exists in the production of a good, firms tend to

A) under-produce the good since society pays these costs.
B) over-produce the good.
C) keep production constant throughout the year.
D) under-allocate resources to the production of the good.

Answer: B

Economics

You might also like to view...

Discrimination occurs when an employer hires a member of one group when another applicant, who is a member of a different group with different characteristics, has better qualifications and is likely to be more productive

Indicate whether the statement is true or false

Economics

A change in the capital stock ________ the short-run aggregate supply curve and ________ the long-run aggregate supply curve

A) shifts; shifts B) shifts; does not shift C) does not shift; shifts D) does not shift; does not shift

Economics