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 occurs when the benefits of a product or service extend beyond the direct consumers to affect other people who did not partake in the purchase or consumption of the product. This is accurately described in option B, where it mentions that the benefits associated with a product exceed those accruing to people who consume it, indicating that non-consumers also receive benefits.

A Positive Externality or Spillover Benefit Occurs When