Question

If there is a negative externality but no positive externality, then the ___________ output is ____________...

If there is a negative externality but no positive externality, then the ___________ output is ____________ than the ____________ output.

a.socially optimal, greater, market

b.market, greater, socially optimal

c.market, less, socially optimal

d.socially optimal, less, market

e.b and d

If there is a positive externality but no negative externality, then the __________ curve _________ the ___________ curve.

a.demand, is the same as, MSB (marginal social benefit)

b.demand, lies above, MSB

c.demand, lies below, MSB

d.supply, lies below, MSC (marginal social cost)

e.supply, lies above, MSC curve

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