Are the following statements true or false? Explain why. .a) (10 points) Competitive markets for goods that create positive externalities result in inefficiently low production of the goods. .b) (10 points) Banning smoking completely will improve efficiency. .c) (10 points) Since pollution is bad, it would be socially optimal to prohibit any production that creates pollution. .d) (10 points) Since consumption of alcohol creates additional health risks to those who drink; we can conclude that consumption of alcohol creates a negative externality to society.
Are the following statements true or false? Explain why. .a
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