Question

If there are positive externalities involved with the delivery or consumption of a product, the level...

If there are positive externalities involved with the delivery or consumption of a product, the level of output will be

more than the efficient amount of production.

equal to the efficient amount of production.

less than the efficient amount of production.

dictated by public demand.

decided by the imposition of government quota.
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Homework Answers

Answer #1

Option C

  • A production is said to be inefficient if consumption or delivery of any product leads to externalities.
  • Positive externality leads to spill over effects and the level of output will be inefficient when compared to the amount of production .
  • This is because a positive externality benefits not only the person involved in the transaction, but also the indirect participants of the transaction or the third parties.
  • For example health care benefits by the private organisations provide benefits to others for the whole community even for those who do not pay.
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