When a positive externality is present in a market,total surplus is:
A) higher when buyers only consider private costs.
B) lower when buyers only consider private costs.
C) lower when buyers consider social costs.
D) None of these statements is true.

Question

Quizplus · Accepted Answer

When a positive externality is present, the market fails to account for the additional benefits to society, leading to underconsumption and a lower total surplus when buyers only consider private costs.

When a Positive Externality Is Present in a Market,total Surplus