A positive externality is:
A) an external benefit.
B) an external cost that affects the buyer.
C) an external cost that affects the seller.
D) a benefit that affects the buyer, not the seller.

Question

Quizplus · Accepted Answer

A positive externality is an economic benefit that is received by a third party who is not directly involved in the transaction. This benefit is external to the market transaction and leads to a social welfare gain. Therefore, option A is the correct answer as it states "an external benefit" which is the definition of a positive externality.

A Positive Externality Is