Exhibit 31-5

-Refer to Exhibit 31-5.If a positive externality exists,then curve __________ represents the marginal social benefit curve and the area __________ represents the market failure.

Question

Exhibit 31-5
 
-Refer to Exhibit 31-5.If a positive externality exists,then curve __________ represents the marginal social benefit curve and the area __________ represents the market failure.

Quizplus · Accepted Answer

The marginal social benefit curve is the curve that represents the total benefit to society from an additional unit of a good or service. The market failure is the area between the marginal social benefit curve and the marginal private benefit curve. In this case, curve 2 represents the marginal social benefit curve and the area BDC represents the market failure.

Exhibit 31-5 -Refer to Exhibit 31-5.If a Positive Externality Exists,then Curve __________