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.
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter12: Environmental Protection And Negative Externalities
Section: Chapter Questions
Problem 40P: Show the market for cigarettes in equilibrium, assuming that there are no laws banning smoking in...
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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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