Answer the following questions true (T) or false (F)
1. When there is a positive externality in a free market, too much of the good is produced and consumed.
2. When there is a negative externality, the competitive output is greater than the economically efficient output level.
3. The marginal social cost of a good or service is the cost borne by the producer.
1. FALSE
2. TRUE
3. FALSE
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When comparing a single-price monopoly to a perfectly competitive market with the same costs
A) both the monopoly's output and price are lower than the perfectly competitive market's output and price. B) both the monopoly's output and price are higher than the perfectly competitive market's output and price. C) the monopoly's output is higher and the monopoly's price is lower than the perfectly competitive market's output and price. D) the monopoly's output is smaller and the monopoly's price is higher than the perfectly competitive market's output and price.
If the bidders at a first-price auction have true values of $8, $7, $6, and $5, the item will sell for
a. $8 b. $7 c. just over $8 d. just under $7