Question

Which of the following statements is TRUE? I. In the face of a positive externality, a perfectly competitive market produces less than the socially optimal quantity of output. II. If vaccinations create an external marginal benefit, the marginal social benefit of vaccinations will always exceed their private marginal benefit. III. In unregulated markets, negative externalities create deadweight losses, but positive externalities do not. IV. In the face of a negative externality, a perfectly competitive market produces more than the socially optimal quantity of output. A. I, II, and IV are correct B. III only is correct C. I and III are correct D. I and IV are correct

          Which of the following statements is TRUE? 
I. In the face of a positive externality, a perfectly competitive market produces less than the socially optimal quantity of output.
II. If vaccinations create an external marginal benefit, the marginal social benefit of vaccinations will always exceed their private marginal benefit.
III. In unregulated markets, negative externalities create deadweight losses, but positive externalities do not.
IV. In the face of a negative externality, a perfectly competitive market produces more than the socially optimal quantity of output.

A. I, II, and IV are correct
B. III only is correct
C. I and III are correct
D. I and IV are correct

Added by Erik W.

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