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11 Nov 2018
When there is a positive externality in the market for a good, which of these statements is true? (choose all the correct answers)
a. The private market tends to produce less than is socially efficient.
b. The social planner sets marginal social benefit equal to firms' marginal cost.
c. Firms set their marginal private cost equal to the marginal external cost.
d. The private market tends to produce more than is socially efficient.
e. Production of this good should be banned
When there is a positive externality in the market for a good, which of these statements is true? (choose all the correct answers)
a. The private market tends to produce less than is socially efficient.
b. The social planner sets marginal social benefit equal to firms' marginal cost.
c. Firms set their marginal private cost equal to the marginal external cost.
d. The private market tends to produce more than is socially efficient.
e. Production of this good should be banned
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