Author Question: When does the marginal social cost of producing a good exceed the marginal private cost of producing ... (Read 146 times)

jazziefee · **on:** Jun 29, 2018

When does the marginal social cost of producing a good exceed the marginal private cost of producing it?

What will be an ideal response?

Question 2

Undistributed profits ________ counted as part of GDP because ________.

A) are not; households are not paid by the firms
B) are; they can be used to buy other goods
C) are; they are considered income paid to households and loaned back to firms
D) are not; they are considered an intermediate good
E) are; firms are required to pay corporate income taxes on them

Meganchabluk · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

If the production of a good generates a negative externality, the marginal social cost of producing the good exceeds the marginal private cost of producing it.

Answer to Question 2

C