If both a monopoly and a competitive market with the same marginal cost would produce a quantity that is greater than the social optimum in a market because of externalities, then
A) welfare is greater under monopoly.
B) welfare is greater under competition.
C) welfare is the same for both market structures.
D) the social optimum must be zero.
A
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The Fed can attempt to increase the federal funds rate by
A) selling government bonds, which increases the money supply. B) selling government bonds, which decreases the money supply. C) buying government bonds, which increases the money supply. D) buying government bonds, which decreases the money supply.
Faced with a large federal budget deficit, the government decides to decrease expenditures and tax revenues by the same amount. This action will affect output and interest rates in which of the following ways?
A) Increase/Increase B) Increase/Decrease C) no change/Decrease D) Decrease/Increase E) Decrease/Decrease