In the case of an external benefit, marginal private benefit is ______ marginal social benefit at all quantity levels.
A) equal to
B) less than
C) greater than
D) incomparable to

Question

Quizplus · Accepted Answer

In the case of an external benefit, the marginal social benefit is greater than the marginal private benefit because the external benefit is not included in the private benefit. It is a positive effect that spills over to third parties who didn't pay for it. Therefore, the correct answer is B, less than.

In the Case of an External Benefit, Marginal Private Benefit