In the Absence of Regulation,which of the Following Is True

Multiple Choice

In the absence of regulation,which of the following is true of a good or service that generates a positive externality?

A) The supply of the good will be less than the socially optimal level of output.
B) The producer will be able to capture the benefit from the positive externality in the form of increased profits.
C) The market price of the good will be equal to its marginal external cost [MEC].
D) The market price of the good will be lower than the socially optimal price.
E) The producer will produce the good at the point where marginal total cost [MTC] equals price.