Refer to the information provided in Figure 16.3 below to answer the question(s) that follow. Figure 16.3
-Refer to Figure 16.3. If the firm maximizes profits and the government ________, it will produce 20 units of output.
A) establishes a price floor of $6
B) establishes a price ceiling of $8
C) requires it to take damages into account
D) does not require it to take damages into account

Question

Refer to the information provided in Figure 16.3 below to answer the question(s) that follow.  Figure 16.3
-Refer to Figure 16.3. If the firm maximizes profits and the government ________, it will produce 20 units of output.
A) establishes a price floor of $6 
B) establishes a price ceiling of $8 
C) requires it to take damages into account 
D) does not require it to take damages into account

Quizplus · Accepted Answer

Without seeing Figure 16.3, the correct answer can be inferred based on economic principles. If the government does not require the firm to take damages into account, the firm will produce at the level where its private costs equal its private benefits, which is typically the profit-maximizing level of output. The other options (A, B, C) involve government interventions that would alter the firm's production decisions by either setting price controls or requiring the firm to consider external damages, thus likely affecting the quantity produced.

Refer to the Information Provided in Figure 16