A positive externality or spillover beneﬁt occurs when
A) product differentiation increases the variety of products available to consumers.
B) the beneﬁts associated with a product exceed those accruing to people who consume it.
C) a ﬁrm does not bear all of the costs of producing a good or service.
D) ﬁrms earn positive economic proﬁts.

Question

Quizplus · Accepted Answer

A positive externality or spillover benefit occurs when the benefits associated with a product exceed those accruing to people who consume it. This means that there are additional benefits to society that are not accounted for in the price of the product or service. For example, a company that invests in clean technology may benefit the environment and surrounding community, even though these benefits are not reflected in the price of the company's products.

A Positive Externality or Spillover Beneﬁt Occurs When