If a positive externality exists, __________ in order for the socially optimal output to be reached.

Question

Quizplus · Accepted Answer

When a positive externality exists, it means that the benefits of a good or service extend beyond the direct buyers and sellers. To reach the socially optimal output, where the benefits to society are maximized, demand needs to increase to reflect the true social benefits of the good or service. This adjustment ensures that the market output aligns more closely with the socially optimal level of production and consumption.

If a Positive Externality Exists, __________ in Order for the Socially