When the benefits of producing a good or service spill over to other people, rather than just the buyer, the spillover is referred to as
A) a marginal cost.
B) a Coasian good.
C) an external benefit.
D) an equilibrium social output.
E) an external cost.

Question

Quizplus · Accepted Answer

An external benefit is a positive spillover effect that occurs when the production or consumption of a good or service benefits people who are not directly involved in the transaction. For example, the construction of a new park not only benefits the people who use it but also the surrounding community by increasing property values and providing opportunities for exercise and recreation.

When the Benefits of Producing a Good or Service Spill