Question

Consider two goods - one that generates external benefits and another that generates external costs. The actual market outcome woulda.result in a price that is lower than the efficient price for both goods.b.result in a price that is higher than the efficient price for both goods.c.result in a price that is lower than the efficient price for the good with an external benefit and a price that is higher than the efficient price for the good with an external cost.d.result in a price that is higher than the efficient price for the good with an external benefit and a price that is lower than the efficient price for the good with an external cost

Answer 1

c.result in a price that is lower than the efficient price for the good with an external benefit and a price that is higher than the efficient price for the good with an external cost.

Step-by-step explanation:

As external benefits and costs, none of them are recognized in the price function of each market, this means that benefits nor cost are accounted for the price formation process