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Economics help pls,!!??
02-19-2014, 12:32 PM
Post: #1
Economics help pls,!!??
If too little of a good or service, compared with the socially efficient allocation, is provided by a market, then which of the following is true?

Private benefits and social benefits in the market are the same.
Social costs must exceed private costs in the market.
Positive externalities exist in the market.
All of the above
Negative externalities exist in the market.

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02-19-2014, 12:37 PM
Post: #2
 
Negative externalities exist in the market.

Because general rule for market economy is Social benefit=Private benefit+Positive Externality
Since Social benefit is less than Private benefit then there is negative externality.

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