When there is a positive externality associated with the watering of one's lawn, the free market results in:
A) not enough lawn watering.
B) too much lawn watering.
C) the socially optimal level of lawn watering.
D) people watering each other's lawns.
E) government subsidies for lawn watering.

Question

Quizplus · Accepted Answer

When there is a positive externality, the free market typically underprovides the good or service because individuals do not account for the external benefits to others, leading to less than the socially optimal level of the activity.

When There Is a Positive Externality Associated with the Watering