Which of the following statements is NOT true in the presence of externalities?
A) Social marginal cost equals the sum of internal and external marginal costs.
B) A competitive industry generally produces more than a monopoly.
C) A competitive industry always produces more than the socially efficient level of output.
D) A monopoly always produces more than the socially efficient level of output.

Question

Quizplus · Accepted Answer

In the presence of externalities, a monopoly might produce less than the socially efficient level of output, but it does not always produce more. The statement that a monopoly always produces more than the socially efficient level of output is not true, as monopolies typically produce less than the socially efficient quantity to maximize profit.

Which of the Following Statements Is NOT True in the Presence