Free markets produce too little output when
A)negative externalities exist
B)positive externalities exist
C)production uses fixed-production technology
D)production uses variable technology
E)the resource is exhaustible

Question

Quizplus · Accepted Answer

Free markets tend to underproduce goods or services that have positive externalities because the benefits to society are not fully captured by the producers, leading to less incentive to produce the optimal amount.

Free Markets Produce Too Little Output When