Question

Consider two goods - one that generates external benefits and another that generates external costs. A competitive market economy would tend to produce: Question 5 options: - too much of both goods, relative to the social optimum. - too little of both goods, relative to the social optimum. - too much of the good that generates external benefits relative to the social optimum, and too little of the good that generates external costs. - too little of the good that generates external benefits relative to the social optimum, and too much of the good that generates external costs.

          Consider two goods - one that generates external benefits and another that generates external costs. A competitive market economy would tend to produce:

Question 5 options:
- too much of both goods, relative to the social optimum.
- too little of both goods, relative to the social optimum.
- too much of the good that generates external benefits relative to the social optimum, and too little of the good that generates external costs.
- too little of the good that generates external benefits relative to the social optimum, and too much of the good that generates external costs.

Added by Jennifer H.

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