When Positive Externalities Are Involved, the Market Is Said to

question 80

Multiple Choice

When positive externalities are involved, the market is said to

• A)fail, because it underproduces the good connected with the positive externality.
• B)fail, because it overproduces the good connected with the positive externality.
• C)succeed, because it produces the socially optimal quantity of the good connected with the positive externality.
• D)be "in optimum," because the equilibrium fully adjusts for the positive externality.

---

Definitions:

Chartered

Means licensed, authorized, or given privileges or rights according to a charter.