If the purchase of a good creates a positive externality, then the marginal _____ benefit is greater than the marginal _____ benefit.

Question

Quizplus · Accepted Answer

When a good's purchase results in a positive externality, the marginal social benefit (which includes both private and external benefits) exceeds the marginal private benefit, as the positive effects on third parties are not accounted for in the private benefit.

If the Purchase of a Good Creates a Positive Externality