Consider Two Goods - One That Generates External Benefits and Another

question 127

Multiple Choice

Consider two goods - one that generates external benefits and another that generates external costs. The actual market outcome would

• A) result in a price that is lower than the efficient price for both goods.
• B) result in a price that is higher than the efficient price for both goods.
• C) result in a price that is lower than the efficient price for the good with an external benefit and a price that is higher than the efficient price for the good with an external cost.
• D) result in a price that is higher than the efficient price for the good with an external benefit and a price that is lower than the efficient price for the good with an external cost.

---

Definitions:

DSM-IV-TR

The Diagnostic and Statistical Manual of Mental Disorders, Fourth Edition, Text Revision; a manual published by the American Psychiatric Association detailing diagnostic criteria for mental disorders.

Disruptive Behavior Patterns

Actions or sequences of actions that interrupt the normal flow or functioning of a social or operational system.

Significant Behavior Patterns

Regularly occurring actions or reactions that have importance in predicting or understanding an individual's behavior.

Obsessions

Persistent, unwanted thoughts, images, or impulses that cause significant distress or anxiety.