Positive externalities ______.
A)are not important economically
B)should be reduced through subsidiziation
C)are undersupplied by unfettered markets
D)can be ignored

Question

Quizplus · Accepted Answer

Positive externalities are benefits that are enjoyed by individuals or society as a whole, but that are not reflected in market prices. Examples include education, scientific research, and vaccinations. Because market participants do not take these external benefits into account, they are likely to be under-supplied by unfettered markets. Therefore, some intervention may be necessary to encourage the production or consumption of goods or services that generate positive externalities, such as subsidies or tax incentives. It is not appropriate to ignore positive externalities, as they can have important implications for social welfare and economic growth.

Positive Externalities ______