Suppose the production of a good results in positive externalities. If output occurs at the intersection of the marginal social benefits curve and the supply curve, then

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Quizplus · Accepted Answer

The intersection of the marginal social benefits curve and the supply curve represents the point where both private and social costs and benefits are taken into account. This means that production is occurring where the marginal social benefits (MSB) of the good equal the marginal social costs (MSC) of production. At this point, output is produced at the socially optimal level because all positive externalities are being taken into account. Therefore, choice A is the correct answer.

Suppose the Production of a Good Results in Positive Externalities