Questions: A positive externality (that has not been internalized) causes the a. equilibrium quantity to be either above or below the optimal quantity b. equilibrium quantity to exceed the optimal quantity c. equilibrium quantity to equal the optimal quantity d. optimal quantity to exceed the equilibrium quantity

A positive externality (that has not been internalized) causes the a. equilibrium quantity to be either above or below the optimal quantity b. equilibrium quantity to exceed the optimal quantity c. equilibrium quantity to equal the optimal quantity d. optimal quantity to exceed the equilibrium quantity
Transcript text: A positive externality (that has not been internalized) causes the $\qquad$ a. equilibrium quantity to be either above or below the optimal quantity b. equilibrium quantity to exceed the optimal quantity c. equilibrium quantity to equal the optimal quantity d. optimal quantity to exceed the equilibrium quantity
failed

Solution

failed
failed

The answer is d: optimal quantity to exceed the equilibrium quantity.

Explanation for each option:

a. Equilibrium quantity to be either above or below the optimal quantity: This is incorrect. A positive externality typically results in the equilibrium quantity being below the optimal quantity because the benefits to society are greater than the benefits to the individual consumer or producer, leading to underproduction.

b. Equilibrium quantity to exceed the optimal quantity: This is incorrect. A positive externality causes the equilibrium quantity to be less than the optimal quantity, not more.

c. Equilibrium quantity to equal the optimal quantity: This is incorrect. If a positive externality has not been internalized, the equilibrium quantity will not equal the optimal quantity. The market fails to account for the additional benefits to society, leading to underproduction.

d. Optimal quantity to exceed the equilibrium quantity: This is correct. A positive externality means that the social benefits are greater than the private benefits, leading to a situation where the optimal quantity (considering the external benefits) is greater than the equilibrium quantity determined by the market.

Was this solution helpful?
failed
Unhelpful
failed
Helpful

Questions asked by other users

failedAnswered
Which of these would be considered primary economic activities? (Select all that apply.) Ore processing at a mine Fishing through aquaculture Cloth production from wool Industrial farming of cattle Forestry Mineral extraction
failedAnswered
Which statement is true regarding sustainable economic growth? a.) It emphasizes the importance of current consumption over future consumption. b.) It does not factor in the cost of production-based waste. c.) It is not affected by developments in technology. d.) It considers the impact over time due to natural resource depletion.
failedAnswered
What did Mendel call the hidden trait that reappeared in the second generation of plants? dominant intermediate recessive co-dominant What did Gregor Mendel call the trait that was expressed in all the new seeds when he crossed a plant with yellow seeds with a plant with green seeds? dominant co-dominant recessive or co-recessive
failedAnswered
Which of the following best explains how Jean Phinney's model of ethnic identity development classifies adolescents into one of four different identity statues, and what are the resulting four identity statuses? According to Phinney; identity development among ethnic minority adolescents involves a process in which youth engage in different levels of identity exploration and commitment, the resulting combinations of this process are the four ethnic identity statuses of assimilation, marginality, separation, and biculturalism. According to Phinney, identity developmentamong ethnic minority adolescents involves a process in which youth engage in different levels of identity exploration and commitment, the resulting combinations of this process are the four ethnic identity statuses of diffusion, foreclosure, moratorium, and achievement. According to Phinney, identity development among ethnic minority adolescents involves a process in which youth must negotiate the values of their ethnic group with the values of the majority culture; the resulting combinations of this process are the four ethnic identity statuses of assimilation, marginality, separation, and biculturalism. According to Phinney, identity development among ethnic minority adolescents involves a process in which youth must negotiate the values of their ethnic group with the values of the majority culture; the resulting combinations of this process are the four ethnic identity statuses of diffusion, foreclosure, moratorium, and achievement.
failedAnswered
x+5y=36 5x+3y=26