Without government intervention, society is likely to get too much production of: i. private goods that generate external costs ii. private goods that generate external benefits iii. public goods

Profits

A) are a cost of doing business because they are payments to others. B) are not a cost of doing business because they are owed to resource owners. C) are not a cost of doing business because they are often zero or negative. D) are a cost of doing business because entrepreneurs would not incur the risk of starting a business if they didn't expect to earn profits.

Which of the following leads to an underallocation of resources to a specific economic activity?

A) external costs B) external benefits C) marginal costs D) effluent benefits