Explain why an external benefit leads to an under-allocation of resources to the production of a good
What will be an ideal response?
An external benefit is the benefit associated with the consumption of a good that is not borne by the buyer. Rather, the benefit is borne by third parties. The buyer calculates the amount of the good to consume by comparing private benefits and costs. By ignoring the external benefit, the buyer consumes less of the good than would be the case if the buyer actually received the full benefits of consumption. Hence, society under allocates resources to the production of the good.
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If interest rates in the United States fall,
A) the value of the dollar will fall as foreign investors increase their holdings of U.S. investments. B) the value of the dollar will fall as foreign investors decrease their holdings of U.S. investments. C) the value of the dollar will rise as foreign investors decrease their holdings of U.S. investments. D) the value of the dollar will rise as foreign investors increase their holdings of U.S. investments.
In a market with imperfect product competition, the MRP declines because
a. the MP declines with each worker hired. b. the price of output falls as output increases. c. both output price and the MP decline as output increases. d. MC declines as output increases.
Scarcity and durability characterize the property of money as a medium of exchange
a. True b. False Indicate whether the statement is true or false
"Ensuring that Social Security is financially sound for future generations is an important use of taxpayer dollars" is an example of a
a. normative economic statement. b. positive economic statement. c. statement made by an economist working as a scientist. d. judgment based on evaluation of evidence, not values.