Which of the following statements is TRUE about the relationship among external, internal and social costs?
A) Social costs will always be higher than external costs.
B) Social costs will always be lower than internal costs.
C) Internal costs will always be higher than external costs.
D) Internal costs will never equal external costs.
Answer: A
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The above table shows Homer's total utility from boxes of doughnuts. As Homer's consumption of doughnuts increases
A) both his total utility and his marginal utility increase. B) his total utility increases, but his marginal utility decreases. C) his total utility decreases, but his marginal utility increases. D) both his total utility and his marginal utility decrease.
Refer to Figure 15-12. In the dynamic AD-AS model, the economy is at point A in year 1 and is expected to go to point B in year 2, and the Federal Reserve pursues policy. This will result in
A) potential real GDP levels lower than what would occur if no policy had been pursued. B) inflation rates higher than what would occur if no policy had been pursued. C) real GDP levels higher than what would occur if no policy had been pursued. D) unemployment rates higher than what would occur if no policy had been pursued.