When some fraction of the benefit of an activity is received by people not participating in the activity,it is called a(n)
A) winner's curse.
B) positive externality.
C) external cost.
D) negative externality.
E) efficient allocation.

Question

Quizplus · Accepted Answer

A positive externality occurs when an activity generates benefits for people who are not part of it. This can lead to a market failure, where the market does not fully account for the benefits, resulting in an inefficient allocation of resources.

When Some Fraction of the Benefit of an Activity Is