Which of the Following Statements Is NOT True of External

question 223

Multiple Choice

Which of the following statements is NOT true of external benefits?

• A) External benefits lead to an underallocation of resources to the production of the good that has the external benefit.
• B) External benefits lead to a price in the market that is too high.
• C) External benefits lead to too few of the goods that have the external benefit being produced.
• D) External benefits are a good thing for the allocation of resources because people are getting something at no cost.

---

Definitions:

Loan

Borrowed capital that is expected to be repaid with interest by the borrower to the lender at a future date.

Annual Payments

Payments made once a year for any form of obligation or financial product, such as loans, leases, or insurance premiums.

Annual Return

The percentage change in an investment's value over a year, including dividends and appreciation.

Investment

Assets purchased with the expectation that they will generate income in the future or appreciate in value.