Question

When negative externalities exist in a market, multiple choice 1 equilibrium output will be greater than the efficient price. equilibrium output will be greater than the efficient output. equilibrium price will be less than the efficient output. equilibrium output will be less than the efficient output.

Answer 1

(b)

Equilibrium output will be greater than the efficient output

• Equilibrium output is the point where national income is equal to planned aggregate expenditure.
• Equilibrium output occurs where AD (Aggregate Demand)= AS (Aggregate supply)
• Equilibrium - It is that type of state where market demand and market supply are balanced.
• Disequilibrium- It is the opposite of equilibrium or when is not in the state of equilibrium position it is automatically considered as disequilibrium.
• Different types of equilibrium are as follows-

1. Economic equilibrium
2. Competitive equilibrium
3. General equilibrium
4. Underemployment equilibrium
5. Lindahl equilibrium
6. Intertemporal equilibrium
7. Nash equilibrium

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