When there are positive externalities associated with the consumption of a good, we can expect the market:
A) demand curve to lie above the social demand curve.
B) demand curve to lie below the social demand curve.
C) supply curve to lie above the social supply curve.
D) supply curve to lie below the social supply curve.
E) demand curve to lie below the social supply curve.

Question

Quizplus · Accepted Answer

When there are positive externalities, the social demand curve is higher than the market demand curve because the social benefits exceed the private benefits.

When There Are Positive Externalities Associated with the Consumption of a Good