Which of the following statements about private and social costs is TRUE?
A) Social costs include externalities.
B) Private cost do not include externalities.
C) Social costs are never smaller than private costs.
D) All of the above.
Question 2
If a production process creates pollution, a competitive market produces excessive pollution because
A) the firms do not include the social cost of the pollution in their profit-maximizing decisions.
B) the firms place too high a price on society's cost of inflation.
C) people are not injured by the pollution.
D) zero pollution is optimal.
African lions are highly social predators.
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