Why do private markets fail to reach a socially optimal level when positive externalities are present
A)Private benefit equals social benefit at the private market solution.
B)Private costs exceed private benefits at the private market solution.
C)Social value exceeds private value at the private market solution.
D)Private costs exceed social benefit at the private market solution.

Question

Quizplus · Accepted Answer

When positive externalities are present, the social value (benefit to society) of a good or service exceeds the private value (benefit to the individual consumer), leading to underproduction in private markets compared to the socially optimal level.

Why Do Private Markets Fail to Reach a Socially Optimal