If the social benefit is greater than the private benefit in a particular market,then the private equilibrium will be at a quantity:
A) greater than the socially optimal level.
B) equal to the socially optimal level.
C) less than the socially optimal level.
D) greater than or less than the socially optimum level, depending on the size of the external costs.

Question

Quizplus · Accepted Answer

When social benefits exceed private benefits, it indicates a positive externality. In such cases, the private equilibrium quantity is typically less than the socially optimal level because individuals do not account for the additional benefits to society.

If the Social Benefit Is Greater Than the Private Benefit