Exhibit 30-5

-Refer to Exhibit 30-5. If a positive externality exists, then the external benefits associated with the positive externality equal the distance between points ____________ and the socially optimal output is

Question

Exhibit 30-5
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-Refer to Exhibit 30-5. If a positive externality exists, then the external benefits associated with the positive externality equal the distance between points ____________ and the socially optimal output is

Quizplus · Accepted Answer

A positive externality means that the social benefit is greater than the private benefit. The external benefits are represented by the distance between the social benefit curve and the private benefit curve, which is between points D and B. The socially optimal output is where the social benefit equals the social cost, which is at Q₂.

Exhibit 30-5 ​

Exhibit 30-5