Because of a _____ externality, marginal social benefit is greater than marginal private benefit.
A) production
B) social
C) positive
D) negative

Question

Quizplus · Accepted Answer

Positive externalities occur when the consumption or production of a good causes a benefit to a third party. In the case of a positive externality, the marginal social benefit, which includes both the private benefit and the external benefit, is greater than the marginal private benefit alone. This is because the social benefit takes into account the positive effects on others not directly involved in the transaction.

Because of a _____ Externality, Marginal Social Benefit Is Greater