Private incentives in markets with external benefits lead to _____;private incentives in markets with external costs lead to _____.
A) maximum total economic surplus;deadweight loss
B) deadweight loss;deadweight loss
C) excess total economic surplus;efficiency
D) excess total economic surplus;deadweight loss
E) minimum total economic surplus;efficiency

Question

Quizplus · Accepted Answer

Private incentives in markets with external benefits and costs both lead to deadweight loss because they do not account for the externalities, resulting in underproduction or overproduction relative to the socially optimal level.

Private Incentives in Markets with External Benefits Lead to _____;Private