Multiple Choice
Which of the following statements is NOT true?
A) If the purchase of a good involves a positive externality, then the equilibrium quantity that is purchased in a free market is less than socially optimal.
B) If the purchase of a good involves a positive externality, then the equilibrium price of the good in a free market is higher than the socially optimally price.
C) If the purchase of a good involves a positive externality, then the marginal social benefit is greater than the marginal private benefit.
D) If the purchase of a good involves a positive externality, then free markets lead to a deadweight loss.
Correct Answer:
Verified
Correct Answer:
Verified
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