When the Free Market Produces Less Than the Socially Optimal

question 181

Multiple Choice

When the free market produces less than the socially optimal quantity of a good,

• A)negative externalities must be present
• B)marginal social cost must exceed marginal private cost
• C)marginal private benefit must exceed marginal social benefit
• D)the government should tax production of the good
• E)there has been a market failure

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