The marginal social benefit of a good is equal to the marginal private benefits the good provides plus any additional external or third-party benefits.

Question

Quizplus · Accepted Answer

Marginal social benefit takes into account not only the direct benefits to the consumer (marginal private benefit) but also any positive effects the consumption may have on others who are not directly involved in the transaction (external or third-party benefits). Therefore, the statement is true.

The Marginal Social Benefit of a Good Is Equal to the Marginal