When there is a positive externality in a free market, too much of the good is produced and consumed

Which of the following examples correctly identifies preference reversals?

A) Alice starts using public transport when the price of gasoline increases. B) Sarah's consumption of coffee increases substantially when the price of tea increases. C) Terry decides on Monday that he would join music classes from Thursday, but refuses to do so on Thursday. D) The extra utility that Tim derives from consuming additional units of ice cream decreases as he consumes more ice cream.

Which of the following statements best describes the expected pattern of trade imbalances?

a. The expected pattern of trade imbalances in the world economy has been that low-income economies will run trade surpluses, while middle and high-income economies will run trade deficits. b. The expected pattern of trade imbalances in the world economy has been that low and middle-income economies will run trade surpluses, while high-income economies will run trade deficits. c. The expected pattern of trade imbalances in the world economy has been that high-income economies will run trade surpluses, while low- and middle-income economies will run trade deficits. d. The expected pattern of trade imbalances in the world economy has been that low and high-income economies will run trade surpluses, while middle-income economies will run trade deficits.