Consider a product that generates positive externalities when it is consumed. In this case,
A) firms will produce too little of this product unless they internalize the external benefits.
B) at the market equilibrium, the price is too high to be allocatively efficient.
C) the government could tax the production of this good to improve efficiency.
D) at the market equilibrium, the output would be greater than the socially optimal amount.
E) at market equilibrium, the marginal social benefit is less than the marginal cost of producing the last unit.
Correct Answer:
Verified
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A) perfect
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