Consider a Good That Generates External Benefits and Another That

question 41

Multiple Choice

Consider a good that generates external benefits and another that generates external costs. A competitive market economy would tend to produce:

• A)too much of both the goods relative to the social optimum of each good.
• B)too little of both the goods relative to the social optimum of each good.
• C)too much of the good that generates external benefits and too little of the good that generates external costs relative to the social optimum of each good.
• D)too little of the good that generates external benefits and too much of the good that generates external costs relative to the social optimum of each good.
• E)the same amount of both the goods as the social optimum of each good.

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Definitions:

Beneficiary

An individual or entity entitled to receive benefits or assets under a legal instrument, such as a will, trust, or insurance policy.

Land Contract

A conditional agreement for the sale and purchase of real estate in which the legal title to the property is retained by the seller until the purchaser has fulfilled the agreement, usually by completing the payment of the agreed-on purchase price.

Legal Title

The official right to ownership of property or assets, recognized and protected by law.

Possession

The state or fact of owning or holding something, either physically or legally.