If education produces positive externalities and the government does not intervene in the market, we would expect

Question

Quizplus · Accepted Answer

Positive externalities mean that social benefits exceed private benefits. In the absence of government intervention, the market will only consider private benefits and costs, ignoring the positive externalities. As a result, the market equilibrium quantity will be lower than the efficient equilibrium output level, where both private and social benefits are considered.

If Education Produces Positive Externalities and the Government Does Not