In a free-market economy, a product that entails a positive externality (additional social benefit) will be rev: 04_09_2018 Multiple Choice overproduced.

1. underproduced.
2. produced at the optimal level.
3. provided solely by the government

Products with positive externality are products whose consumption will benefit not only the consumer but the third-party/the whole society as a whole (e.g: education, healthcare)

The problems with positive externality is the third-parties who benefit from the product consumption do not pay for the product; thus, the product's suppliers can not priced-in all the product benefits.

As a result, supplies usually produced less than the optimal level leading the products entailing positive externality underproduced.

So, 1. underproduced is the correct choice.

In a free-market economy, a product that entails a positive externality (additional social benefit) will be rev: 04_09_2018 Multiple Choice overproduced. 1. underproduced. 2. produced at the optimal level. 3. provided solely by the government

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In a free-market economy, a product that entails a positive externality (additional social benefit) will be rev: 04_09_2018 Multiple Choice overproduced.

1. underproduced.
2. produced at the optimal level.
3. provided solely by the government