When society receives more benefits from a good than the individuals who consume the good, then:
A)the marginal social benefit from the good is less than the marginal social cost.
B)the average social benefit is less than the average social cost.
C)the property rights on the good has been well defined.
D)the production of the good generates a positive externality.
E)the production of the good generates a negative externality.

Question

When society receives more benefits from a good than the individuals who consume the good, then:​
A)the marginal social benefit from the good is less than the marginal social cost.
B)the average social benefit is less than the average social cost.
C)the property rights on the good has been well defined.
D)the production of the good generates a positive externality.
E)the production of the good generates a negative externality.

Quizplus · Accepted Answer

When society receives more benefits from a good than the individuals who consume the good, it means that the production of the good generates a positive externality. This happens because the benefits spill over to others who are not directly consuming the good. For example, the production of education generates positive externalities for the society as a whole, as educated individuals are more productive and contribute to the economic growth of the nation. In such cases, the marginal social benefit is greater than the marginal private benefit, and the production of the good is socially desirable.

When Society Receives More Benefits from a Good Than the Individuals