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If the Marginal Private Cost of Producing the Fiftieth Unit

Question 38

Multiple Choice

If the marginal private cost of producing the fiftieth unit of a good is $3 and the marginal social cost of producing the fiftieth unit of the good is $5, then producing the good creates _____ externalities, and the marginal external cost is:


A) positive; $8.
B) positive; $2.
C) negative; $8.
D) negative; $2.

Correct Answer:

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