The marginal external benefit of the sale of smoke detectors in a city declines with annual output.The total external benefit of smoke detectors will therefore eventually become zero.

Question

Quizplus · Accepted Answer

The total external benefit may continue to increase even if the marginal external benefit declines, as long as the marginal external benefit remains positive. The total external benefit only stops increasing when the marginal external benefit becomes zero or negative.

The Marginal External Benefit of the Sale of Smoke Detectors