When you consume good Q, not only do you benefit from consuming the good but other people benefit from your consumption as well. If firms produce good Q where P = MC, firms will be producing

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When a good has positive externalities (other people benefit from your consumption), the social benefit is higher than the private benefit. If firms produce where price equals marginal cost (P = MC), they are not accounting for the external benefits to others. Therefore, they will produce less than the socially efficient level of output, which would include the external benefits in the calculation.

When You Consume Good Q, Not Only Do You Benefit