If unregulated, the market for cigarettes would produce a quantity that is too ____ at a price that is too ____ when compared to the socially optimal results.
A)low; low
B)high; low
C)low; high
D)high; high

Question

Quizplus · Accepted Answer

Unregulated markets are often characterized by overproduction and underpricing. In the case of cigarettes, if the market was left unregulated, it would produce a high quantity of cigarettes at a low price, which would result in negative externalities such as increased healthcare costs and environmental damage. The socially optimal result would be a lower quantity at a higher price.

If Unregulated, the Market for Cigarettes Would Produce a Quantity