Activities that generate external costs will likely be carried out at levels that _____ those that would be efficient.

A) are equal to
B) are less than
C) exceed
D) compete with

Question

Activities that generate external costs will likely be carried out at levels that _____ those that would be efficient.A) are equal toB) are less thanC) exceedD) compete with

Steve Torres · Accepted Answer

Final Answer : C, Explanation :  Activities that generate external costs have costs that are not reflected in the market price, hence the individuals or firms carrying out the activity do not bear the full cost. This means they will carry out the activity at levels that exceed the efficient level, as they do not have to take into account the external costs.

Activities that generate external costs will likely be carried out at levels that _____ those that would be efficient.

A) are equal to
B) are less than
C) exceed
D) compete with

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