If education produces positive externalities and the government does not intervene in the market, we would expect
A)the equilibrium price to be higher than the optimal price.
B)the equilibrium quantity to be lower than the optimal level.
C)the equilibrium quantity to be higher than the optimal level.
D)both a and b are correct

Question

Quizplus · Accepted Answer

Education produces positive externalities, meaning the social benefits exceed the private benefits. Without government intervention, the market will underprovide education, resulting in a lower equilibrium quantity than the socially optimal level.

If Education Produces Positive Externalities and the Government Does Not