If a good gives rise to substantial external benefits to society that are associated with its production and/or consumption, then the good likely has too many resources devoted to its production.

Question

​If a good gives rise to substantial external benefits to society that are associated with its production and/or consumption, then the good likely has too many resources devoted to its production.

Quizplus · Accepted Answer

If a good gives rise to substantial external benefits, it may not necessarily have too many resources devoted to its production. It may actually be socially optimal to encourage the production and consumption of such goods through subsidies or other incentive mechanisms.

​If a Good Gives Rise to Substantial External Benefits to Society

If a Good Gives Rise to Substantial External Benefits to Society