Post Utme Coal City University 2024 Commerce Question 36

Practice objective / multiple choice question 36 from the 2024 Post Utme Coal City University Commerce examination.

Post Utme Coal City University 2024 Commerce Objective / Multiple Choice
Question 36 POST_UTME_COAL_CITY_UNIVERSITY • 2024 • COMMERCE • objective

In a perfect market, the demand curve and supply curve intersect at the equilibrium price and quantity. However, in a market with externalities, the equilibrium price and quantity may not reflect the true social costs and benefits. Which of the following best describes the effect of externalities on the equilibrium price and quantity?

Answer Options

A. The equilibrium price and quantity will increase due to the positive externality.
Correct Answer B. The equilibrium price and quantity will decrease due to the negative externality.
C. The equilibrium price will increase, but the quantity will decrease due to the negative externality.
D. The equilibrium price will decrease, but the quantity will increase due to the positive externality.
Correct Answer
B
Correct Option:
The equilibrium price and quantity will decrease due to the negative externality.

About This Question

This is Post Utme Coal City University 2024 Commerce Question 36. It is one of the objective questions from the 2024 Post Utme Coal City University Commerce examination.

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