Most Economists Believe That There Are Positive Externalities in Education

question 233

Multiple Choice

Most economists believe that there are positive externalities in education. One can conclude that a free market would fail to give the socially optimal outcome because the equilibrium:

• A) price and quantity would be too high.
• B) price would be too low and quantity would be too high.
• C) price and quantity would be too low.
• D) price would be too high and quantity would be too low.
• E) price and quantity would be just right.

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Definitions:

Sellers

Entities or individuals that provide goods or services in exchange for payment, crucial to the operation of any market.

Tax

A compulsory financial charge imposed by a government on individuals, corporations, or goods to finance government activities and public expenditure.

Cigarette Consumption

The amount of cigarettes smoked by individuals or populations within a specified period.

Federal Excise Tax

Federal excise tax is a tax imposed by the federal government on the sale of certain goods and services, such as fuel, tobacco, and alcohol, usually levied on the manufacturer or distributor.