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    Exam 17: Externalities
  5. Question
    "If Production of a Good Creates an External Cost, Then
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"If Production of a Good Creates an External Cost, Then

Question 285

Question 285

Essay

"If production of a good creates an external cost, then, when production is such that the marginal private costs are equal to the marginal private benefits, the market outcome will be inefficient." Explain whether this assertion is correct or incorrect.

Correct Answer:

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The assertion is correct. Efficiency req...

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