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-**With the positive externality _____________ would be the optimal quality.

Question

Quizplus · Accepted Answer

The optimal quantity is where the social marginal benefit (SMB) equals the social marginal cost (SMC), which is at point B1. At this point, the social benefit is greater than the private benefit, indicating a positive externality. Therefore, the optimal quality would be at the socially optimal quantity, which is given by the intersection of the social demand curve and the social supply curve (Q*_social).

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