Positive externalities are likely to cause:
A)underallocation of resources.
B)overallocation of resources.
C)a scarcity of goods and services in society.
D)a surplus of goods and services in society.

Question

Quizplus · Accepted Answer

Positive externalities lead to underallocation of resources because the benefits to society are greater than the benefits to the individual, causing the good or service to be underproduced relative to the socially optimal level.

Positive Externalities Are Likely to Cause