For a Production Process That Involves a Positive Externality, It

question 104

Multiple Choice

For a production process that involves a positive externality, it is true that

• A) marginal social cost is more than marginal private cost.
• B) a per unit tax could be imposed on the producer to achieve the socially optimal level of production.
• C) a subsidy to producers could increase production to the socially optimal level.
• D) marginal social benefit is less than marginal private benefit.
• E) without government intervention the market will produce too much of this good.