If the marginal social benefit of consuming a good or a service exceeds the marginal private benefit
A)a negative externality exists.
B)the market achieves economic efficiency.
C)a positive externality exists.
D)the sum of consumer surplus and producer surplus is maximized.

Question

Quizplus · Accepted Answer

When the marginal social benefit of consuming a good or service exceeds the marginal private benefit, a positive externality exists. This means that the benefit received by society as a whole is greater than the benefit received by an individual consumer, indicating that spillover effects are present. In this situation, market equilibrium does not achieve Pareto optimality and may result in underproduction of the good or service.

If the Marginal Social Benefit of Consuming a Good or a Service