Under what conditions do positive externalities exist
A)Social value exceeds private value, and market quantity exceeds the socially optimal quantity.
B)Social value is less than private value, and market quantity exceeds the socially optimal quantity.
C)Social value exceeds private value, and market quantity is less than the socially optimal quantity.
D)Social value seldom exceeds private value, and therefore social quantity is less than private quantity.

Question

Quizplus · Accepted Answer

Positive externalities exist when the social value of a good or service exceeds its private value. This means that the benefits to society from the good or service are greater than the benefits to the individual producer or consumer. When market quantity is less than the socially optimal quantity, it indicates that there is some degree of market failure, where not enough of the good or service is being produced or consumed to maximize social welfare. Therefore, option C is the correct answer.

Under What Conditions Do Positive Externalities Exist