When the Market for Product Y Includes a Positive Externality

question 1

Multiple Choice

When the market for product Y includes a positive externality,:

• A)marginal social cost exceeds marginal private cost.
• B)marginal private cost exceeds marginal social cost.
• C)marginal social benefit exceeds marginal private benefit.
• D)marginal private benefit exceeds marginal social benefit.

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Definitions:

Gross Investment

Refers to the total amount of money invested in the creation of new capital assets in an economy within a specific time period, without deducting depreciation.

Corporate Taxes

Taxes imposed on the income or profit of corporations by the government.

Mortgage Interest Rates

The percentage charged on a mortgage loan, influencing the affordability and demand for real estate.

Housing Starts

The number of new residential construction projects that have begun during any particular month.