A positive externality affects market efficiency in a manner similar to a ?
Correct answer: B. public good
- A. rival good
- B. public good
- C. private good
- D. common resource
Explanation
A positive externality creates benefits for people who are not directly involved in the transaction, resembling the spillover benefits of a public good. Markets tend to underproduce goods with such benefits.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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