When the Consumption of a Good Generates an External Benefit

question 114

Multiple Choice

When the consumption of a good generates an external benefit,

• A) the private benefit consumers receive from the good will be higher than the true social benefit.
• B) too much of the good will tend to be produced from the viewpoint of economic efficiency.
• C) the community generally suffers an exactly offsetting external cost from the production of the good.
• D) the market demand curve will understate the total benefits derived from consumption of the good, and as a result, too little of it will be produced and consumed.

---

Definitions:

Homo Erectus

An extinct species of human that lived between 1.9 million and 143,000 years ago, known for being one of the first to use fire and complex tools.

Australopithecines

A genus of hominins that lived in Africa from about 4 to 2 million years ago, known for walking upright on two legs.

Complex Plans

Intricate or detailed arrangements or strategies developed to achieve a particular goal, often requiring careful thought and organization.

Inner Lives

The complex internal experiences and emotional life of an individual.