Which of the following statements is INCORRECT? A) When external benefits exist in a market, Qmarket Qefficient. D) Through taxation, government action can result in Qmarket = Qefficient.

Question

Which of the following statements is INCORRECT?
A) When external benefits exist in a market, Qmarket < Qefficient.
B) When external benefits exist in a market, social surplus is maximized when social benefits equal the marginal costs of production.
C) When external costs exist in a market, Qmarket > Qefficient.
D) Through taxation, government action can result in Qmarket = Qefficient.

Quizplus · Accepted Answer

When external benefits exist in a market, social surplus is maximized when social benefits exceed the marginal costs of production.

Which of the Following Statements Is INCORRECT