Which of the following is true?
i.In an unregulated market with an external benefit,consumers don't take it into account and consume less than the efficient quantity.
ii.Marginal social cost equals marginal private cost minus marginal external cost.
iii.An unregulated market produces more than the efficient quantity of a good with an external cost.
A) only i
B) only ii
C) only iii
D) i and ii
E) i and iii

Question

Quizplus · Accepted Answer

Statement i is true because in an unregulated market, consumers only take their private costs into account, not external benefits, hence they consume less than the efficient quantity. 
Statement iii is also true because in an unregulated market, producers only consider their private costs, not external costs, and therefore they will produce more than the efficient quantity. 
Statement ii is false because marginal social cost equals marginal private cost plus marginal external cost, not minus.

Which of the Following Is True