If the production of a good involves positive externalities, ...

[Pea0909berry]

If the production of a good involves positive externalities, ________.
 
  A) the market price of the good is higher than its optimal price
  B) the market price of the good is lower than its optimal price
  C) the average cost of production of the good in the long run is zero
  D) the variable cost of production of the good is zero

Question 2

The Harvard experiment found the answer to Why is private health insurance so expensive? is:
 
  A) adverse selection - healthier patients don't want expensive coverage.
  B) adverse selection - poorer patients want more free health care.
  C) adverse selection - Harvard employees wanted more extensive coverage.
  D) adverse selection - health care subsidies resulted in unhealthy patients wanting more coverage.

[Mholman93]

Answer to Question 1

B

Answer to Question 2

A