Production that generates positive externalities typically produces _______ than the socially optimum and this is because benefits to ________ are not taken into account by the market.
A) more; free riders
B) less; free riders
C) less; government
D) more; government
E) more; antipolluters

Question

Quizplus · Accepted Answer

Production that generates positive externalities typically produces less than the socially optimum level because the benefits to third parties (in this case, free riders who benefit without contributing) are not fully accounted for by the market. This leads to underproduction from a societal perspective.

Production That Generates Positive Externalities Typically Produces _______ Than the Socially