If the social benefit of consuming a good or a service exceeds the 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 maximised.

Question

Quizplus · Accepted Answer

When the social benefit of consuming a good or service exceeds the private benefit, a positive externality exists. This means that the benefits of consumption are not only enjoyed by the individual consumer, but they also spill over to others in the society. The market does not achieve economic efficiency in this case because the private cost is lower than the social cost. To address this market failure, the government may intervene by implementing policies such as subsidies, grants, or tax incentives to promote the consumption of the good or service.

If the Social Benefit of Consuming a Good or a Service