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Question
Consider a market where production of the good is creating a negative externality. In the market equilibrium, there is a deadweight loss because the
a. internal cost of production is less than the social cost.
b. internal cost of production is not equal to the internal benefit.
c. internal benefit is not equal to the external benefit.
d. social cost is greater than the internal benefit.
e. internal benefit is less than the internal cost.
Answer
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Related questions
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What is the long-run consequence of a price ceiling law?
a. A surplus will continue to exist and will grow larger over time.
b. A surplus will continue to exist and will grow smaller over time.
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Q:
Suppose Solomon lives in a community with no price controls. What do you expect will happen if his town borders a community where there is a binding price ceiling on most products?
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