When positive externalities are present in a market:
A)individuals don't take into account all the benefits associated with their market choices.
B)society bears part of the cost of private transactions.
C)individuals consume more than the socially optimal quantity.
D)All of these are true.

Question

Quizplus · Accepted Answer

Positive externalities occur when the benefits of a transaction or activity are not fully captured by the individuals involved in the transaction. Instead, some benefits spill over to others who are not directly involved in the activity, leading to a situation where individuals don't take into account all the benefits associated with their market choices. Choices B and C describe negative externalities, not positive ones.

When Positive Externalities Are Present in a Market