ECONOMICS
MARKET FAILURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Marginal private costs > marginal social costs
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Marginal social costs > marginal private costs
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Marginal private benefits > marginal social benefits
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Marginal private benefits > marginal social costs
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Detailed explanation-1: -Positive externalities of production is when the simple production of a good or service leads to a benefit that provides for either a society as a whole, an individual or another business or government entity.
Detailed explanation-2: -A deadweight loss also exists when there is a positive externality because at the market quantity, the marginal social benefit is greater than the marginal social cost. When an externality exists, the socially optimal output is not achieved.
Detailed explanation-3: -Answer and Explanation: Flowers in your neighbor’s front yard is a perfect example of a positive externality.
Detailed explanation-4: -Advertising. When McDonalds, Walmart, or some other big firm advertises, it solves a market failure. Education. The procurement of any form of education has the potential to benefit a third party. Insurance. Local Investment. Vaccinations / Personal Hygiene.