If Positive Externalities Are Present in the Production of a Good

question 4

Multiple Choice

If positive externalities are present in the production of a good, what will society do?

• A) It will produce too much of the good, since the marginal private benefit to consumers is less than the marginal social benefit.
• B) It will produce too little of the good, since the marginal private benefit to consumers is less than the marginal social benefit.
• C) It will produce too little of the good, since the marginal private benefit to consumers is greater than the marginal social benefit.
• D) It will produce too much of the good, since the marginal private benefit to consumers is greater than the marginal social benefit.

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Definitions:

Accounts Receivable

Money owed to a company by its customers for goods or services that have been delivered but not yet paid for.

Assignment

The transfer of rights, property, or obligations from one party to another, often seen in contracts and legal agreements.

Notice

A formal communication or indication to someone about a fact, requirement, or intention.

Equitable Remedy

Remedies granted by courts in situations where monetary damages are inadequate, including injunctions and specific performance, based on principles of fairness.