If there are important external benefits associated with the consumption of a product:_______.
A. special excise taxes should be levied on producers of the product.
B. the market supply curve for the product lies too far to the right to provide an efficient allocation of resources.
C. the market demand curve understates the relative importance of the product and resources are therefore underallocated to its production.
D. government should enact legislation to prohibit the production of the commodity.

Question

Nanagibson3039 Nanagibson3039

04-03-2021
Business

contestada

If there are important external benefits associated with the consumption of a product:_______.
A. special excise taxes should be levied on producers of the product.
B. the market supply curve for the product lies too far to the right to provide an efficient allocation of resources.
C. the market demand curve understates the relative importance of the product and resources are therefore underallocated to its production.
D. government should enact legislation to prohibit the production of the commodity.

Respuesta :

Otras preguntas

Insert five numbers between 1/27 and 27 to form a geometric sequence. there are 2 answers

A statement that focuses on your feelings rather than on someone else’s behavior is a:

The amount you pay for gasoline for your car is an example of a(n):public-good cost.internal cost.external cost.social cost.third-party cost.

Please solve number 80

What type of technology can add geographical identification data to media such as digital photos taken on a mobile device?

What was the primary factor causing traffic collisions between 2009 and 2015 according to the California CHP?

is √ 4/9 a rational number

Which one of the following is not a good type of rival for an offensive-minded company to target? A. Market leaders that are vulnerable B. Runner-up firms with

$23,803 is invested, part at 8% and the rest at 5%. If the interest earned from the amount invested at 8% exceeds the interest earned from the amount invested a

Mr.yueng graded his students math quizzes students came up with four different answers when solving the equation x3=22. Which answers is correct.

Palky Palky · Answer 1 · 2021-03-07T10:04:40+01:00

Answer:

C. the market demand curve understates the relative importance of the product and resources are therefore underallocated to its production.

Explanation:

Positive external benefits refer to third party positive side effects, above & beyond private marginal benefit to the concerned consumer.

Eg : Education - Its consumption not only affects the concerned person, but the positive trickle down to the people & society around.

Personal consumption decisions are based on : equalisation - of private marginal benefit (demand) curve & private marginal cost curve. However, goods having positive external benefits have real marginal benefit curve increased over private benefit curve, by the extent of extra marginal social benefit.

So, market demand (based on private marginal benefit) curve understates the importance of product, and resources are therefore underallocated to its production (due to undervaluation of demand).