Your Economics Professor Has Announced That He or She Will

Multiple Choice

Your economics professor has announced that he or she will assign final grades as follows: the top 20 percent of students will get an A, the bottom 20 percent of students will get an F, and everyone else will get a C. This grading scheme generates a positional externality because:

A) society as whole will be better off when people are educated.
B) students will study hard no matter how the professor assigns final grades.
C) each student's final grade depends on his or her relative standing.
D) studying requires both time and effort.