Exhibit 30-5

Refer to Exhibit 30-5. If a positive externality exists then the socially optimal output is

Question

Exhibit 30-5 ​

Refer to Exhibit 30-5.  If a positive externality exists then the socially optimal output is

Quizplus · Accepted Answer

In a market with a positive externality, the marginal social benefit exceeds the marginal private benefit, leading to an underproduction of the good at the equilibrium output level (Q₁). The socially optimal output level is where the marginal social benefit equals the marginal social cost, which is at point Q₂. Therefore, the socially optimal output is Q₂.

Exhibit 30-5 ​ Refer to Exhibit 30-5. If a Positive Externality Exists Then the Externality

Exhibit 30-5 Refer to Exhibit 30-5. If a Positive Externality Exists Then the Externality