In the Presence of Positive Externalities, a Free Market Will

question 79

Multiple Choice

In the presence of positive externalities, a free market will choose a price which is too ____ and produce an output which is too ____ compared with the social optimum.

• A) high; low
• B) low; low
• C) high; high
• D) low; high

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Definitions:

Usury Law

refers to regulations governing the amount of interest that can be charged on a loan, intended to protect borrowers from excessively high rates.

Loaned Out

Refers to funds that have been borrowed out to others, usually by a financial institution.

Usury Law

Legislation that sets maximum interest rates that can be charged on loans, to protect consumers from excessive charges.

Interest Rate

The cost of borrowing money or the reward for saving, typically expressed as a percentage of the principal amount annually.