-Refer to the diagram above.If a positive externality exists in this market,the marginal social benefit from consuming this good at the competitive equilibrium output level is
A) greater than P0.
B) equal to P0.
C) either greater than or less than P0,depending on the elasticity of supply.
D) less than P0.
E) either equal to or less than P0,depending on the elasticity of demand.

Question

-Refer to the diagram above.If a positive externality exists in this market,the marginal social benefit from consuming this good at the competitive equilibrium output level is
A) greater than P0. 
B) equal to P0. 
C) either greater than or less than P0,depending on the elasticity of supply. 
D) less than P0. 
E) either equal to or less than P0,depending on the elasticity of demand.

Quizplus · Accepted Answer

A positive externality means the social benefit is greater than the private benefit. Therefore, the marginal social benefit at the competitive equilibrium output level is greater than the price P0.

-Refer to the Diagram Above