Suppose the Production of a Good Results in Positive Externalities

question 160

Multiple Choice

Suppose the production of a good results in positive externalities. If output occurs at the intersection of the marginal social benefits curve and the supply curve, then

• A)output will be at a higher level than if all benefits were not taken into account.
• B)output will be at a lower level than the socially optimal level.
• C)the marginal private benefit curve will lie above and to the right of the marginal social benefit curve.
• D)there will be underproduction.

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