Markets will tends to produce too little of activities that generate positive externalities.

Question

Quizplus · Accepted Answer

Positive externalities are benefits that arise from an economic activity, but are not reflected in the market price. Since market participants do not fully take into account these positive externalities, they may not engage in activities that generate them or may not generate enough of them. As a result, there is a tendency for markets to produce too little of activities that generate positive externalities.

Markets Will Tends to Produce Too Little of Activities That