Suppose a good has an external benefit and no external cost. When a competitive, unregulated market is at its equilibrium, then the
A) marginal private benefit is less than the marginal social benefit.
B) marginal private benefit is greater than the marginal social benefit.
C) marginal private cost is less than the marginal social cost.
D) marginal private cost is greater than the marginal social cost.

Question

Quizplus · Accepted Answer

In the presence of an external benefit, the marginal social benefit (which includes both private and external benefits) is greater than the marginal private benefit.

Suppose a Good Has an External Benefit and No External