Multiple Choice
Suppose the market-equilibrium quantity of good x is 5,000 units and the socially-optimal quantity of good x is 4,000 units. Then
A) the production of good x imposes external costs on society.
B) the private value of good x exceeds the private cost of good x when 5,000 units are produced.
C) the private cost of good x exceeds the private value of good x when 5,000 units are produced.
D) the social cost of good x exceeds the private value of good x when 4,000 units are produced.
Correct Answer:
Verified
Correct Answer:
Verified
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