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.

Question

Quizplus · Accepted Answer

When there are positive externalities associated with the consumption of a good, the market demand curve lies below the social demand curve because the market demand does not account for the additional benefits to society that are not captured by the private consumers.

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