Consider Two Goods--One That Generates External Benefits and Another That

question 70

Multiple Choice

Consider two goods--one that generates external benefits and another that generates external costs. A competitive market economy would tend to produce

• A) too much of both goods.
• B) too little of both goods.
• C) too much of the good that generates external benefits and too little of the good that generates external costs.
• D) too little of the good that generates external benefits and too much of the good that generates external costs.

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Definitions:

Purchase

The action of buying goods or services.

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A car is a wheeled motor vehicle used for transportation, typically having four tires and powered by an internal combustion engine or electric motor.

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The yield of orange trees harvested in a particular area during a single growing season.

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