In a market with positive externalities,the market equilibrium price will be greater than the efficient equilibrium price.

Question

Quizplus · Accepted Answer

In a market with positive externalities, the market equilibrium price tends to be lower than the efficient equilibrium price that would ensure the optimal allocation of resources. This is because the positive spillover effects of the good or service are not reflected in the market price, leading to an underproduction of the good or service. As a result, the efficient equilibrium price would be higher than the market equilibrium price.

In a Market with Positive Externalities,the Market Equilibrium Price Will