When There Are Positive Externalities Associated with a Good or Service

question 9

Multiple Choice

When there are positive externalities associated with a good or service, private markets tend to_____________________________them.

• A) Overallocate.
• B) Underallocate.
• C) Efficiently allocate.
• D) Completely ignore.

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Definitions:

Demand

The measure of goods or services that consumers are inclined and able to procure at assorted prices during an established period.

Income

The financial earnings of an individual or entity, typically acquired through employment, business ventures, or other investments.

Quantity Demanded

The aggregate sum of a product or service that buyers are ready and capable of buying at a specific price level.

Demand

The inclination to buy products and services supported by the capability and readiness to spend a specific amount of money.