When positive externalities are present in a market,it means that:
A) private benefits are less than social benefits.
B) private benefits are less than external benefits.
C) social benefits are less than external benefits.
D) external benefits are equal to social benefits.

Question

Quizplus · Accepted Answer

When positive externalities are present, the social benefits are greater than the private benefits. This is because the beneficial effect spills over to others who are not directly involved in the transaction, creating additional benefits beyond those that are captured by the buyer and seller. As a result, the market outcome may be inefficient, as the private benefits are less than the total or social benefits.

When Positive Externalities Are Present in a Market,it Means That