If the Production of a Certain Commodity Generates External Benefits

question 9

Multiple Choice

If the production of a certain commodity generates external benefits for those who do not participate directly in the production process,then:

• A)too large a quantity of the good will be produced.
• B)at equilibrium,the marginal social benefit is less than the cost of producing an extra unit.
• C)the government can subsidize consumption of the good and improve efficiency.
• D)a government intervention in this market will cause the marginal social benefit to exceed the marginal social cost.

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