The external benefits of using cars are ____ and the external costs are _____?
Correct answer: C. low; high
- A. low; low
- B. high; high
- C. low; high
- D. high; low
Explanation
Cars provide some external benefits, but these are generally small compared with the external costs imposed through congestion, pollution, noise, and accidents. Thus the standard comparison is low external benefits and high external costs.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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