Due to externalities generated by home landscaping, its price:
A) is above the optimal level, and quantity traded is below the optimal level.
B) is below the optimal level, and quantity traded is above the optimal level.
C) and quantity traded are both above the optimal level.
D) and quantity traded are both below the optimal level.
E) must fall in order for the market to reach equilibrium.

Question

Quizplus · Accepted Answer

Home landscaping often generates positive externalities, such as increased property values and aesthetic benefits, which are not reflected in the market price. This leads to a price and quantity traded that are both below the optimal level.

Due to Externalities Generated by Home Landscaping, Its Price