Asked by
Ridhi Prasad
on Nov 05, 2024
Verified
If there are external costs in production and firms do not have to account for these costs, then firms will produce
A) at the efficient level.
B) an output level that is below the efficient level.
C) an output level that is above the efficient level.
D) an output level that is either above or below the efficient level.
Efficient Level
Describes a state where resources are allocated in a way that maximizes productivity or utility with minimal waste.
External Costs
Uncompensated negative effects experienced by others due to an individual or company's actions, not reflected in market prices.
- Understand the connection between marginal costs, marginal benefits, and the optimization of production levels.
- Comprehend the idea of external costs and their role in causing overproduction when there is no government intervention.
Verified Answer
CT
Learning Objectives
- Understand the connection between marginal costs, marginal benefits, and the optimization of production levels.
- Comprehend the idea of external costs and their role in causing overproduction when there is no government intervention.