An inframarginal positive externality _____.
A)requires subsidization to reach an optimal level of output
B)requires regulation to reach an optimal level of output
C)requires corrective taxation to reach an optimal level of output
D)requires no action because the optimal level of output has been reached

Question

Quizplus · Accepted Answer

An inframarginal positive externality is a situation where an additional unit of production or consumption of a good or service benefits others, but the cost or benefit to the producer or consumer remains the same. In this case, the market will already produce the optimal level of output because the positive externality is already being taken into account. Therefore, there is no need for any action such as regulation, taxation, or subsidization.

An Inframarginal Positive Externality _____