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If the External Costs Exceed the Consumer and Producer Surplus

Question 43

Multiple Choice

If the external costs exceed the consumer and producer surplus from consuming a good, then the


A) production level should fall to zero.
B) production level should fall to the minimum of the average variable cost curve.
C) production level should fall to the minimum of the average cost curve.
D) positive externalities will lead to less of this product being produced than is socially optimal.

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