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.
A
You might also like to view...
Suppose milk and chocolate syrup are complements (mixed together they make chocolate milk). If the price of milk increased by exactly 25%, the economic way of thinking suggests
A) the demand for milk would decrease. B) the demand for chocolate syrup would decrease. C) the demand for milk would decrease by exactly 25%. D) the demand for chocolate syrup would decrease by exactly 25%.
If the amount you owe on your house is greater than the price of the house, you have
A) negative equity in your house. B) no value to your house. C) a reverse mortgage on your house. D) a mortgage rate that is too high.