If a positive externality is associated with the purchase of smoke detectors:
A) the marginal social benefit of smoke detectors exceeds their price.
B) the marginal social benefit of smoke detectors is zero.
C) the marginal social benefit of smoke detectors equals their price.
D) more than the efficient quantity of smoke detectors will be sold.

Question

Quizplus · Accepted Answer

A positive externality means that the social benefit is greater than the private benefit. Therefore, the marginal social benefit of smoke detectors exceeds their price.

If a Positive Externality Is Associated with the Purchase of Smoke