Economics (AS & A Level) · May / June 2021 · Paper 31 · Question 14
9708Private costs and benefits, externalities and social costs and benefits
When there are positive externalities in consumption, what can be concluded about the output of the market?
- AOutput must be above the allocative efficient level.
- BOutput must be at the allocative efficient level.
- COutput must be below the allocative efficient level.
- DOutput can be above or below the allocative efficient level.
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Correct answer: C. Output must be below the allocative efficient level.
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