Question

if a nation protects an industry because it believes that there are positive externalities in the production process, it is asserting that the free market will question 7select one: a. produce the correct amount but charge too high a price. b. produce less than is optimal from society's point of view. c. produce more than is optimal from society's point of view. d. produce the correct amount but charge too low a price.

Answer 1

If a nation protects an industry due to positive externalities, the free market will produce less than is optimal from society's point of view.

Step-by-step explanation:

If a nation protects an industry because it believes that there are positive externalities in the production process, it is asserting that the free market will produce less than is optimal from society's point of view. When there are positive externalities, the benefits from producing more of a good exceed the costs to society, meaning that the free market would produce less than the socially optimal amount. This is why the nation intervenes to protect the industry and ensure the production of the optimal amount.