If Positive Externalities Are Present in the Production of a Good

question 36

Multiple Choice

If positive externalities are present in the production of a good, society will:

• A)produce too much of the good because the marginal private benefit to consumers is less than the marginal social benefit.
• B)produce too little of the good because the marginal private benefit to consumers is greater than the marginal social benefit.
• C)produce too much of the good because the marginal private benefit to consumers is greater than the marginal social benefit.
• D)produce too little of the good because the marginal private benefit to consumers is less than the marginal social benefit.
• E)produce too much of the good because of the free-rider problem.

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Definitions:

Burial Compression

The process by which sediment layers accumulate over time, exerting pressure on lower layers, leading to compaction and rock formation.

Fluid Pressure

The pressure exerted by a fluid, either a liquid or a gas, which plays a critical role in various geological processes like oil migration and faulting.

Compression

The process or result of applying force to something that causes it to become squeezed or compacted, often leading to a decrease in volume.

Tension

A force that stretches something, making it tight or the state of being stretched tight.