When society receives more benefits from a good than the individuals who consume the good,
A)the marginal social benefit for the good is less than the marginal social cost
B)too much of the good would be produced by a private market
C)property rights are assignable and well defined
D)the good produces a positive externality
E)the good is exhaustible with fixed-production technology

Question

Quizplus · Accepted Answer

When society receives more benefits from a good than the individuals who consume the good, it is a case of positive externality. This means that the marginal social benefit for the good is greater than the marginal private benefit, leading to an under-allocation of resources in a private market. As a result, too little of the good is produced, and there is a market failure. Examples of goods that can produce positive externalities include education, healthcare, and research and development.

When Society Receives More Benefits from a Good Than the Individuals