There are no externalities in the market for brim hats; therefore, the:
A) external marginal cost equals the marginal cost.
B) social marginal cost equals the private marginal cost.
C) social benefit equals the external marginal benefit.
D) equilibrium level of output will be too low.

Question

Quizplus · Accepted Answer

The absence of externalities in the market for brim hats means that the costs borne by society (social marginal cost) are the same as the costs incurred by the producers (private marginal cost), as there are no additional costs imposed on third parties.

There Are No Externalities in the Market for Brim Hats;