Which of the following are true?
a. Negative externalities are real costs, but, unlike the other resources a firm uses in production, no one owns the air, so a firm does not have to pay for its use.
b. In the case of external costs, firms tend to produce too much from society's standpoint, causing an efficiency loss due to an overallocation of scarce resources to the production of the good.
c. If government could impose a pollution tax equal to the exact size of the external costs imposed by a firm, then the firm would produce at the socially desired level of output.
d. All of the above are true.
d
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Based on the graph for the relationship between elasticity of the demand and total revenue, total revenue is maximized ______.
a. when demand is unit elastic
b. when marginal revenue is increasing
c. when marginal revenue is maximized
d. when demand is inelastic
Self-interest makes cartels unstable for all of the following reasons except which one?
A) Each firm has an incentive to be the whistle-blower. B) Each firm has the incentive to produce more than the agreed upon quantity. C) Each firm has the incentive to lower their costs by producing less than the agreed upon quantity. D) Each firm has an incentive to be the first to report and confess cartel behavior.