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If There Are Significant External Costs Associated with the Production

Question 196

Multiple Choice

If there are significant external costs associated with the production of a product, it can be said that the private cost of production to the firm ____ the cost to society associated with this product and output should ____ to move toward the efficient situation.


A) overstates; increase
B) understates; increase
C) overstates; decrease
D) understates; decrease
E) overstates; remain the same

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