When an external cost exists in the production of a good, firms ...

[Melani1276]

When an external cost exists in the production of a good, firms tend to
 
  A) under-produce the good since society pays these costs.
  B) over-produce the good.
  C) keep production constant throughout the year.
  D) under-allocate resources to the production of the good.

Question 2

Refer to the above table. Suppose the demand for smartphones rises because more people use the Internet with a smartphone. The new equilibrium price will be
 
  A) 200.
  B) 275.
  C) more than 275.
  D) impossible to be determined given the information.

[peter]

Answer to Question 1

B

Answer to Question 2

C