+- Twitist Forums (http://twitist.com)
+-- Forum: General Social Media & Marketing Forums (/forum-8.html)
+--- Forum: Social Marketing (/forum-10.html)
+--- Thread: The result of external costs is that social demand is_______ than market demand, and the socially optimal quan? (/thread-8399.html)
The result of external costs is that social demand is_______ than market demand, and the socially optimal quan? - Alpha - 10-13-2012 10:11 AM
A. Greater; less
B. Less; greater
C. Greater; greater
D. Less; less
What's the answer for this? I got D as my answer but not sure about it. An explanation would be very much appreciated!
thank you
- jerry w - 10-13-2012 10:19 AM
D. Less; less
The existence of external costs implies that social costs are not factored into the price that consumers pay; the demand for the product for consumers is higher than that of society. This makes social demand less than market demand. The lower social demand would be at a quantity that is less than the higher market demand.