If a Market Is Characterized by a Positive Externality That

question 95

Multiple Choice

If a market is characterized by a positive externality that is not the result of a technology spillover,

• A)the socially optimal level of output is less than the equilibrium level of output, and the optimal price is greater than the equilibrium price.
• B)the socially optimal level of output is greater than the equilibrium level of output, and the socially optimal price is less than the equilibrium price.
• C)the socially optimal level of output is greater than the equilibrium level of output, and the socially optimal price is greater than the equilibrium price.
• D)the socially optimal level of output is less than the equilibrium level of output, and the socially optimal price is less than the equilibrium price.

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Definitions:

Joint Ventures

A business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task.

Sole Proprietorships

A type of business entity owned and operated by one individual, without any legal distinction between the owner and the business.

Partnerships

A legal form of business operation between two or more individuals who share management and profits.

Bankruptcy Filing

The legal process undertaken by individuals or businesses that cannot meet their financial obligations, to seek relief from some or all of their debts.