Consider a competitive equilibrium with positive production externalities. In this econ- omy output will, (a) be equal to its Pareto optimal value. (b) exceed its Pareto optimal value. (c) be below its Pareto optimal value. (d) be where MRSC = M RTc.

Consider a competitive equilibrium with positive production externalities. In this econ- omy output will, (a) be equal to its Pareto optimal value. (b) exceed its Pareto optimal value. (c) be below its Pareto optimal value. (d) be where MRSC = M RTc.

ENGR.ECONOMIC ANALYSIS

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Chapter1: Making Economics Decisions

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Question

Consider a competitive equilibrium with positive production externalities. In this econ-
omy output will,
(a) be equal to its Pareto optimal value.
(b) exceed its Pareto optimal value.
(c) be below its Pareto optimal value.
(d) be where MRS.c
= M RTL.c.

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