When an Activity Like Education Generates a Positive Externality, The

question 21

Multiple Choice

When an activity like education generates a positive externality, the:

• A)market demand curve is below the marginal social benefit curve.
• B)market demand curve is above the marginal social benefit curve.
• C)marginal cost of production is below the market demand curve.
• D)market will produce more than the efficient level of output.

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Definitions:

Rate of Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment's initial cost.

Expenditure

The total amount of money spent by an individual, firm, or government on goods and services.

Innovation

The process of creating new methods, products, or ideas that bring about significant improvements or changes.

Diffusion

The process by which a new idea, product, or practice spreads through a population or society.