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​A Rain Barrel Is a Container That Captures and Stores

Question 399

Multiple Choice

​A rain barrel is a container that captures and stores rainwater for landscape and garden use during dry periods. As a result, rain barrels benefit the community through water conservation. If homeowners do not consider this external benefit of rain barrels, then


A) ​the socially optimal quantity of rain barrels will be larger than the equilibrium quantity of rain barrels.
B) ​the socially optimal quantity of rain barrels will be smaller than the equilibrium quantity of rain barrels.
C) ​the socially optimal price of rain barrels will be lower than the equilibrium price of rain barrels.
D) the market for rain barrels would benefit from a tax on rain barrels.

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