Consider Two Goods-One That Generates External Benefits and Another That

question 117

Multiple Choice

Consider two goods-one that generates external benefits and another that generates external costs. A competitive market economy would tend to produce:

• A)​too much of both goods, relative to the social optimum.
• B)​too little of both goods, relative to the social optimum.
• C)​too much of the good that generates external benefits relative to the social optimum, and too little of the good that generates external costs.
• D)​too little of the good that generates external benefits relative to the social optimum, and too much of the good that generates external costs.

---

Definitions:

Computer

an electronic device designed to accept data, perform prescribed mathematical and logical operations at high speed, and display the results of these operations.

Language Properties

Fundamental characteristics of language, including syntax, semantics, phonetics, and pragmatics, that enable communication.

Inductive Reasoning

A method of reasoning in which specific observations lead to broader generalizations or theories.

Deductive Reasoning

A logical process where a conclusion follows necessarily from the given premises; if the premises are true, the conclusion must also be true.