For both public goods and common resources,why does an externality arise
A)Something of value has no price attached to it.
B)The goods are undervalued by society.
C)The social optimum level of output is lower than the market equilibrium's.
D)There are no defined property rights.

Question

Quizplus · Accepted Answer

An externality arises because something of value, such as clean air or fish in the ocean, has no price attached to it, leading to overuse or under-provision.

For Both Public Goods and Common Resources,why Does an Externality