标题: Economics Question on efficiency [打印本页] 作者: optiix 时间: 2013-4-8 22:00 标题: Economics Question on efficiency
In the market economy, if a good has external benefits it is least likely to lead to:
A. a social loss.
B. a deadweight loss.
C. overproduction of the good.
D. an inefficient quantity being produced
The answer in the book is given as C, but I think its D.
Can anyone explain me why?作者: NakedPuts 时间: 2013-4-8 22:01
Oops, I did not read the question properly, It saysleast likely. I thought it was the other way作者: waldziuchna 时间: 2013-4-8 22:01
It is C because external benefits generate less than efficient quantities of quantity produces and consumed. In essence, the presence of external benefits cause underproduction of a good, not overproduction. At least, this is how I understood the concept.
