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Consider Two Goods - One That Generates External Benefits and Another

Question 114

Multiple Choice

Consider two goods - one that generates external benefits and another that generates external costs. The actual market outcome would


A) result in a price that is lower than the efficient price for both goods.
B) result in a price that is higher than the efficient price for both goods.
C) result in a price that is lower than the efficient price for the good with an external benefit and a price that is higher than the efficient price for the good with an external cost.
D) result in a price that is higher than the efficient price for the good with an external benefit and a price that is lower than the efficient price for the good with an external cost.

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