(Answered) Question 10 (4 points)If education produces positive externalities, we would expectthe government…

3. How do positive externalities lead to underprovision of education?
When education generates spillovers, private demand reflects only individual benefits. Producers and households therefore supply or consume less than the social optimum. Because marginal social benefit exceeds marginal private benefit, equilibrium quantity falls short, creating underprovision that policy tools can address.