A positive externality causes

Question

Quizplus · Accepted Answer

A positive externality occurs when there is a benefit to a third party that is not captured by the market. This means that the marginal social benefit will be greater than the marginal private benefit. Therefore, in order to achieve an efficient outcome, the market quantity should be higher than the quantity determined by the marginal private cost. Hence, the marginal social benefit should exceed the marginal private cost at the market equilibrium.

A Positive Externality Causes