A positive externality results from the purchase of smoke detectors.If smoke detectors are sold in a competitive market,

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A positive externality means that there is a benefit to society beyond what the individual consumer receives. In a competitive market, the price and quantity will be determined by the intersection of the marginal cost and marginal benefit curves. Since the marginal social benefit is greater than the marginal private benefit, the demand curve for smoke detectors will shift to the right in order to reflect this additional benefit to society. This will lead to a higher equilibrium quantity and price, and consequently, the marginal social benefit will exceed the marginal private benefit received by any consumer.

A Positive Externality Results from the Purchase of Smoke Detectors