Which of the following statements about a market that is aftected by a positive externality is correct? The optimum level of output is less than the free market level of output and the optimum price is greater than the free market price. The optimum level of output is greater than the free market level of output and the optimum price is less than the free market price. The optimum level of output is less than the free market level of output and the optimum price is less than the free market price. The optimum level of output is greater than the free market level of output and the optimum price is greater than the free market price.
Which of the following statements about a market that is aftected by a positive externality is correct? The optimum level of output is less than the free market level of output and the optimum price is greater than the free market price. The optimum level of output is greater than the free market level of output and the optimum price is less than the free market price. The optimum level of output is less than the free market level of output and the optimum price is less than the free market price. The optimum level of output is greater than the free market level of output and the optimum price is greater than the free market price.
Chapter17: Externalities And The Environment
Section: Chapter Questions
Problem 2.4P
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I chose option D and got this wrong. I thought that when you had a positive externality The demand curve move to the right. Wouldn’t this mean that the level of output and the price would be greater than the free market ones? can you explain how my answer is wrong? What is correct?
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ISBN:
9781544336329
Author:
Robert L. Sexton
Publisher:
SAGE Publications, Inc