In the case of an external benefit, the social value curve lies ______ the demand curve.
A) above
B) below
C) with
D) sometimes above and sometimes below

Question

Quizplus · Accepted Answer

In the case of an external benefit, the social value curve lies above the demand curve because the benefit is not taken into account by the individual consumer, resulting in an underestimation of the good's total value to society. Therefore, the social value curve, which includes the external benefit, will be higher than the demand curve.

In the Case of an External Benefit, the Social Value