If the market equilibrium quantity is less than the socially optimal quantity, one can infer that:
A)the private supply curve for the activity is below the socially optimal supply curve.
B)the private demand curve for the activity is above the socially optimal demand.
C)there is a positive externality associated with this good.
D)there is a negative externality associated with this good.

Question

Quizplus · Accepted Answer

Buyers and sellers do not consider external benefits, so the market will produce less than the socially optimal quantity.

If the Market Equilibrium Quantity Is Less Than the Socially