When a Positive Externality Is Present the Market Will Produce

question 5

Multiple Choice

When a positive externality is present the market will produce

• A)an efficient amount and charge a fair price.
• B)too much product and charge a price greater than a fair market value price.
• C)too little product and charge less than a fair market value price.
• D)too little and charge more than a fair market value price.

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Definitions:

Decision-Making Strategy

A systematic approach or method employed to choose among alternatives and make informed choices.

Availability Heuristic

A mental shortcut that relies on immediate examples that come to a given person's mind when evaluating a specific topic, concept, method, or decision.

Behavioural Economics

A field of study that examines how psychological, cognitive, emotional, and social factors affect economic decisions and market outcomes.

Economic Decisions

Choices made by individuals, households, or firms regarding the allocation of resources.