The presence of negative externalities leads to a misallocation of societal resources because:
a. whenever external costs are imposed on outside parties, the good should not be produced at all
b. less of the good than is ideal for society is produced.
c. there are some costs associated with production that the producer fails to take into consideration.
d. the government always intervenes in markets when negative externalities are present, and the government is inherently inefficient.
c
You might also like to view...
If Congress passed a one-time tax cut in order to stimulate the economy in 2014, and tax rate levels returned to their pre-2014 level in 2015, how should this tax cut affect the economy?
A) The tax cut would increase consumption spending more than would a permanent tax cut. B) The tax cut would lower the price level in 2014. C) The tax cut would increase consumption spending by the same amount as would a permanent tax cut. D) The tax cut would increase consumption spending less than would a permanent tax cut.
Pizza is a normal good if the demand a. for pizza rises when income rises
b. for pizza rises when the price of pizza falls. c. curve for pizza slopes upward. d. curve for pizza shifts to the right when the price of burritos rises, assuming pizza and burritos are substitutes.