Which of the following is true regarding external benefits? O a. External benefits will encourage firms to undertake other projects that generate external costs. O b. There is no incentive for entrepreneurs to figure out ways to capture the external benefits generated by their actions. Oc. If entrepreneurs can figure out how to capture the external benefits, it will often be profitable for them to undertake productive projects that would have otherwise been unprofitable. Od. When an activity generates substantial external benefits, markets will generally direct firms to produce more than the optimal quantity of the good.
Which of the following is true regarding external benefits? O a. External benefits will encourage firms to undertake other projects that generate external costs. O b. There is no incentive for entrepreneurs to figure out ways to capture the external benefits generated by their actions. Oc. If entrepreneurs can figure out how to capture the external benefits, it will often be profitable for them to undertake productive projects that would have otherwise been unprofitable. Od. When an activity generates substantial external benefits, markets will generally direct firms to produce more than the optimal quantity of the good.
Chapter8: Market Failure
Section: Chapter Questions
Problem 2P: Draw a standard supply and demand diagram for televisions, and indicate the equilibrium price and...
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Transcribed Image Text:Which of the following is true regarding external benefits?
a. External benefits will encourage firms to undertake other projects that generate external costs.
b. There is no incentive for entrepreneurs to figure out ways to capture the external benefits generated by their actions.
C. If entrepreneurs can figure out how to capture the external benefits, it will often be profitable for them to undertake productive projects that would have otherwise been unprofitable.
Od. When an activity generates substantial external benefits, markets will generally direct firms to produce more than the optimal quantity of the good.
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