Figure 15.3 -Refer to Figure 15.3.In the absence of any government intervention, the private market A)underproduces by Q_o- Q_m units. B)overproduces by Q_o- Q_m units. C)overproduces by Q_n- Q_m units. D)underproduces by Q_n- Q_m units.

Question

Quizplus · Accepted Answer

In the absence of government intervention, the private market typically underproduces public goods or goods with positive externalities, because it does not account for the social benefits of production, only the private benefits. The correct choice indicates a calculation of underproduction by comparing the socially optimal quantity to the market quantity.

Figure 15.3 -Refer to Figure 15.3.In the Absence of Any Government Intervention