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Solution Library
Impact of external costs and external benefits on resource allocation
Question:
(a) Explain the impact of external costs and external benefits on resource allocation;
(b) Why are public goods not produced in sufficient quantities by private markets?
(c) Which of the following are examples of public goods (or services)? Delete the incorrect option
Explain your choice.
(i) The Judicial system ................................................................................... Yes/No
(ii) Pencils ..................................................................................................... Yes/No
(iii) The quarantine service ............................................................................... Yes/No
(iv) The Great Wall of China................................................................................... Yes/No
(v) Contact lenses .......................................................................................... Yes/No
Summary:
The question is about externalities affecting resource allocation, public goods and their implication on the profit of a firm have been answered.
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