Consider an industry that produces an output Q with marginal private cost (MC) and marginal social cost (MSC) as given in the table:
Q MC MSC
1 2 4
2 4 7
3 6 10
4 8 13
5 10 16
Which of the following is TRUE?
A) The production of each additional unit results in a larger marginal external cost.
B) The production of each additional unit results in the same marginal external cost.
C) The production of each additional unit results in a lower marginal external cost.
D) There are no marginal external costs associated with the production of this good.
A
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Which of the following is not an example of an externality?
a. Drunk drivers raise everyone's auto insurance premiums. b. The price of lumber increases as lumberjacks' wages increase. c. The neighbor's beautiful front yard increases your home value. d. Someone drives a car that emits thick black smoke. e. People who live near a bakery enjoy the smell of freshly baked bread.
Perfect Competition is an industry in which there is only one supplier of a product that has no close substitutes
a. True b. False Indicate whether the statement is true or false