Author Question: What would happen in a free market system when production of a good generates negative ... (Read 123 times)

karateprodigy · **on:** Jun 29, 2018

What would happen in a free market system when production of a good generates negative externalities?

A) There is a shortage of the good.
B) There is a surplus of the good.
C) The equilibrium quantity of the good is less than the efficient amount.
D) The equilibrium quantity of the good is more than the efficient amount.

Question 2

If the farmer is producing 5000 bushels of soybeans at point b in the above figure, we know that

A) the farmer is not using his resources efficiently.
B) the farmer is using his land to produce a crop other than soybeans or corn.
C) the farmer must be using more land than was used in constructing the production possibilities curve.
D) the farmer is using his resources efficiently.