If production of a good creates external benefits, a competitive market will likely produce
A) less output than would maximize profit.
B) more output than would maximize profit.
C) less output than is efficient.
D) more output than is efficient.

Question

Quizplus · Accepted Answer

A competitive market will produce less output than is efficient because it does not account for the external benefits, leading to underproduction relative to the socially optimal level.

If Production of a Good Creates External Benefits, a Competitive