If Consumption of Education Creates a Positive Externality, Then in Order

question 115

Multiple Choice

If consumption of education creates a positive externality, then in order to increase efficiency relative to the outcome determined by private decisions,

• A)more education must be produced
• B)the same amount of education must be produced, and the price should be lower
• C)less education must be produced, and the price should be higher
• D)less education must be produced, and the price should be lower
• E)less education must be produced at the same price

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Definitions:

Advertising Expenditure

The amount of money spent on promoting products or services through various media and marketing channels.

Marginal Cost of Production

The cost of producing an additional unit of a good, taking into account both variable and fixed costs.

Price Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in the price of that good, with elasticity greater than 1 indicating a high responsiveness.

Marginal Cost

The increase in cost resulting from the production of one additional unit of output.