Solved

Consider a Product That Generates Positive Externalities When It Is

Question 89

Multiple Choice

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:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents