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In competitive markets, if a good has external marginal benefit it is __________________________ compared to the socially desirable quantity and if a...
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Question

In competitive markets, if a good has external marginal benefit it

is __________________________ compared to the socially desirable quantity and if a good has external marginal cost it is ______________________ compared to the socially desirable quantity.
Question 11 options:


underprovided; underprovided


overprovided; underprovided


overprovided; overprovided


underprovided; overprovided
Question 12 (1 point)
 














Refer to the graph below.
 


 
The inverse demand curve and the marginal cost curve for an industry with two firms are plotted above. Both the firms are in a collusive agreement, produce identical goods and share production and profit equally. Is the collusion stable?
Question 12 options:


Only one firm has an individual incentive to cheat, and collusion is stable.


No firm has an individual incentive to cheat, and collusion is stable.


Only one firm has an individual incentive to cheat, and collusion is unstable.


Each firm has an individual incentive to cheat, and collusion is not stable.

Step-by-step answer

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Subject: Business, Economics

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