If consuming a good with a positive externality, a person will likely consider only the _____ marginal benefits of consumption, which causes _____ consumption than is socially optimal.
A) external, not the private; more
B) private, not the external; more
C) private, not the external; less
D) external, not the private; less

Question

Quizplus · Accepted Answer

When consuming a good with a positive externality, individuals typically consider only their private marginal benefits, ignoring the external benefits to others. This leads to less consumption than is socially optimal, as the full social benefits are not taken into account.

If Consuming a Good with a Positive Externality, a Person