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:

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