When positive externalities are present, the social demand curve lies to the _____ of the private demand curve, and the private market _____ the good.

Question

Quizplus · Accepted Answer

When positive externalities are present, the social benefits of consuming a good exceed the private benefits, which means the social demand curve lies to the right of the private demand curve. This situation typically leads to underproduction of the good in the private market, as the market does not account for the external benefits to society.

When Positive Externalities Are Present, the Social Demand Curve Lies