A good that has external benefits associated with its production will be

Question

Quizplus · Accepted Answer

When a good has external benefits associated with its production, it means that the production of the good creates benefits that are not reflected in the market price. In this case, the market will not take into account the positive impact of the good in society, and the good will therefore be underproduced. This happens because producers will not be motivated to produce more of the good than what will bring them a profit, and consumers will not be willing to pay more for the good than its market price. As a result, society will not be able to fully realize the benefits of the good, and there will be a market failure.

A Good That Has External Benefits Associated with Its Production