Asked by Megan Quinn on May 08, 2024
Verified
Refer to Figure 16.1. Absent government intervention, how much fertilizer will be produced?
A) Zero because any level of production involves an external cost.
B) 50 bags
C) 60 bags
D) indeterminate from this information
Government Intervention
Actions taken by a government to adjust or interfere in the economic affairs of a nation, with the intention of achieving economic or societal objectives.
External Cost
Costs of a transaction that affect people other than the buyer or seller, typically not reflected in the market price, such as pollution or other negative externalities.
- Perceive the impact of governmental measures and market influences on the scale of production.
- Apprehend the concept of external costs and explore its role in facilitating overproduction when there is a lack of control from government entities.
Verified Answer
JS
Jennifer SmithMay 13, 2024
Final Answer :
C
Explanation :
The quantity of fertilizer produced absent government intervention will be determined by the market equilibrium, where the private supply and demand curves intersect. Without seeing Figure 16.1, the specific answer cannot be determined from the information provided. However, the question implies that there is a specific quantity that can be identified, suggesting that the correct answer is based on an assumption of typical market behavior rather than the presence of external costs or the need for additional information.
Learning Objectives
- Perceive the impact of governmental measures and market influences on the scale of production.
- Apprehend the concept of external costs and explore its role in facilitating overproduction when there is a lack of control from government entities.