When a Good Causes Positive External Benefits to Accrue to Third

question 110

Multiple Choice

When a good causes positive external benefits to accrue to third parties, an unfettered market will

• A) under-allocate resources to the good causing the benefit.
• B) over-allocate resources to the good causing the benefit.
• C) cause the equilibrium quantity, established before the benefit is taken into account, to be produced more efficiently.
• D) eliminate such goods.

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Definitions:

Social System

An organized and structured arrangement of social institutions, relationships, and patterns of behavior that work together to fulfill social needs.

Government

An organization or system that governs a community, state, or nation, making and enforcing laws.

Essential Hypertension

High blood pressure with no identifiable cause, also known as primary hypertension, which may be influenced by genetic or environmental factors.

Blood Pressure

The pressure of circulating blood on the walls of blood vessels, an important indicator of heart health.