Which of the following occurs if the production of a good gives rise to positive externalities?
A) The marginal social cost curve lies to the right of the supply curve.
B) The marginal social cost curve lies to the left of the supply curve.
C) The marginal social benefit curve lies to the right of the demand curve.
D) The marginal social benefit curve lies to the left of the demand curve.

Question

Quizplus · Accepted Answer

When a good's production results in positive externalities, it means that there are additional benefits to society that are not captured in the market price. This situation is represented by the marginal social benefit curve lying to the right of the demand curve, indicating that the social value of the good is higher than what is reflected by the private demand.

Which of the Following Occurs If the Production of a Good