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. A competitive market economy would tend to produce:

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