If a good that generates positive externalities were produced and priced to take into account these spillover benefits, then its?

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25-08-2022
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If a good that generates positive externalities were produced and priced to take into account these spillover benefits, then its?

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smecloudbird18 smecloudbird18 · Answer 1 · 2022-09-06T05:04:18+02:00

If a good that generates positive externalities were product and priced to take into account these spillover benefits, then its price and output would increase. Under the perfect competition, a firm must sell all of its output units at the same market price.

As a result, in this form of market, the market price equals a firm's marginal revenue. Buyers truly set the pricing in a competitive market, and the firms make output decisions based on the demand for the product, because every firm seeks to offer lower prices to their customers in order to the expand their market share.

To learn more about market, click here.

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