31) Since the price of antibiotics does not include all the costs of using antib

Question

31) Since the price of antibiotics does not include all the costs of using antibiotics, the price is too: A) low, and so antibiotics are underused B) high, and so antibiotics are overused. C) high, and so antibiotics are underused. D) low, and so antibiotics are overused. 32) When there are significant extenal costs associated with its production, the market produces of that good. an unknown amount B) just the right amount C) too much D) too little 33) Refer curve er to the figure. Suppose the imposition of a per-unit tax on sellers shifts the supply from So to Si·The equilibrium quantity sold under the tax is A) 12. B) 10. C) 4. D) 16. S, 6 12 16 ternalities are: always bacd. sometimes good and sometimes bad. always good. either good nor bad. Page 71

Explanation / Answer

Answer.)

Q31.) D.) Low, and so antibiotics are overused

Q32.) C.) too much

Negative externalities are overproduced because its true cost is not considered during production. For a negative externality, Marginal social cost is always higher than marginal private cost.

Q33.) A.) 12

Note that after shifting supply curve from S0 to S1, S1 intersecting D at 12 units of output.

Q34.) B.) Sometimes good and sometimes bad.

Positive externalities are good like defence and negative externalities are bad like pollution.

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