Medical Research That Ends in a Cure for a Serious

Multiple Choice

Medical research that ends in a cure for a serious disease produces positive externalities. What is the impact of this positive externality on economic efficiency?

A) At equilibrium, less than the economically efficient quantity of medical research is produced.
B) A deadweight loss occurs because at equilibrium the marginal social cost of medical research is greater than the marginal social benefit.
C) At equilibrium, more than the economically efficient quantity of medical research is produced.
D) A deadweight loss occurs because at equilibrium the marginal social cost equals the marginal social benefit.