When benefits are highly concentrated, but costs are diffused across a large number of people:

A. the market tends to overproduce these goods.
B. the government tends to overproduce these goods.
C. the government tends to underproduce these goods.
D. the market tends to underproduce these goods.

Question

18-12-2019
Business

contestada

When benefits are highly concentrated, but costs are diffused across a large number of people:

A. the market tends to overproduce these goods.
B. the government tends to overproduce these goods.
C. the government tends to underproduce these goods.
D. the market tends to underproduce these goods.

Respuesta :

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ewomazinoade ewomazinoade · Answer 1 · 2019-12-18T10:11:34+01:00

Answer:

A. the market tends to overproduce these goods.

Explanation:

Negative externality is when benefits are highly concentrated, but costs are diffused across a large number of people.

Negative externality leads to market failure.

Examples of negative externality:

a. pollution caused by a large industrial firm carrying out production activities.

b. Passive smoking when a person is smoking.

Negative externality tends to be overproduced. The government can discourage activities that produce negative externality by imposing tax. The tax increases the cost of the activity and therefore discourages it. This tax is known as pigovian tax.

I hope my answer helps you.

When benefits are highly concentrated, but costs are diffused across a large number of people: A. the market tends to overproduce these goods. B. the government tends to overproduce these goods. C. the government tends to underproduce these goods. D. the market tends to underproduce these goods.

Respuesta :

Otras preguntas

When benefits are highly concentrated, but costs are diffused across a large number of people:

A. the market tends to overproduce these goods.
B. the government tends to overproduce these goods.
C. the government tends to underproduce these goods.
D. the market tends to underproduce these goods.