A perfectly competitive steel mill that produces large amounts of ...

[renzo156]

A perfectly competitive steel mill that produces large amounts of pollution (a negative externality) will, from a social point of view,
 a. produce too little steel.
  b. produce the socially optimal quantity of steel.
  c. produce too much steel.
  d. produce too much steel only if it installs pollution control equipment.

Question 2

In the case of a negative externality, the social marginal cost will
 a. exceed the private marginal cost.
  b. be equal to private marginal cost.
  c. fall short of private marginal cost.
  d. bear no significant relation to private marginal cost.

[tandmlomax84]

Answer to Question 1

c

Answer to Question 2

a