Consider Two Goods-One That Generates External Benefits and Another That

Multiple Choice

Consider two goods-one that generates external benefits and another that generates external costs. What would a competitive market economy tend to produce?

A) too little of both goods, relative to the social optimum
B) too much of the good that generates external benefits relative to the social optimum, and too little of the good that generates external costs
C) too little of the good that generates external benefits relative to the social optimum, and too much of the good that generates external costs
D) too much of both goods, relative to the social optimum