Which of the Following Describes How a Positive Externality Affects

question 132

Multiple Choice

Which of the following describes how a positive externality affects a competitive market?

• A)The externality causes a difference between the private benefit from consumption and the social benefit.
• B)The externality causes a difference between the private benefit from production and the social cost of production.
• C)The externality causes quantity demanded to exceed quantity supplied.
• D)The externality causes a difference between the social cost of production and the social cost of consumption.

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Definitions:

Joint Venture

A business arrangement where two or more parties agree to pool their resources for the purpose of accomplishing a specific task.

Sole Proprietorship

A business owned and operated by one individual, where there is no legal distinction between the owner and the business entity.

Competitor

A person or organization that is in the same industry or field and is in competition for the same market share.

Robinson-Patman Act

A 1936 U.S. law aimed at preventing anticompetitive practices by producers, specifically price discrimination.