When a Market Experiences a Positive Externality

question 255

Multiple Choice

When a market experiences a positive externality,

• A)the demand curve does not reflect the value to society of the good.
• B)too much of the good is being produced.
• C)the government can internalize the externality by imposing a tax on the product.
• D)the private value is greater than the social value.

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Definitions:

Supply

The total amount of a product or service available for purchase at any given time or price.

Supply

The total amount of a certain good or service that is available to consumers, which can be affected by various factors like price, production costs, and technology.

Bread

A staple food made primarily from flour, water, and yeast or another leavening agent, baked into a variety of forms.

Surplus

An excess amount of a commodity, product, or resource beyond what is needed or utilized.