If a Positive Externality Exists in the Provision of a Good

question 31

Multiple Choice

If a positive externality exists in the provision of a good that is provided in a perfectly competitive market without government intervention,then,at the market equilibrium level of output,

• A) additional net gains to society are possible by reducing output.
• B) additional net gains to society are possible by raising output.
• C) the marginal social benefit equals the marginal social cost.
• D) additional net gains to society are not possible by either increasing or decreasing output.
• E) output is at the socially optimal level of output.

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Definitions:

Solve

To solve an equation means to find all possible values of the variable that make the equation true.

Expression

A combination of symbols that represent a quantity or formula, which can include numbers, variables, and operation symbols.

Solve

To find the value(s) of variable(s) that satisfy an equation, inequality, system of equations, or other mathematical conditions.

Expression

A combination of symbols and operators in mathematics that represents a value.