Medical research that results in a cure for a serious disease produces positive externalities. What is the impact of this positive externality on economic efficiency?
A) At the market equilibrium, less than the economically efficient quantity of medical research is produced.
B) A deadweight loss occurs because at the market equilibrium the marginal social cost of medical research is greater than the marginal social benefit.
C) At the market equilibrium, more than the economically efficient quantity of medical research is produced.
D) A deadweight loss occurs because at the market equilibrium the marginal social cost equals the marginal social benefit.
Answer: A
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