The Yankee Candle Company, in Hatfield, Massachusetts, makes scented candles. When strawberry-scented candles are made, townspeople enjoy the scent that covers the town. When potpourri-scented candles are made, people stay indoors to avoid the scent. We can infer that if the scented-candle markets are in equilibrium
A) neither strawberry nor potpourri scented candles will be produced
B) strawberry candles' prices are higher than the socially optimum
C) potpourri candles' prices are higher than the socially optimum
D) candle production generates only negative externalities
E) candle production technologies are inefficient
Correct Answer:
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