In markets with positive externalities,_____
A)the marginal social benefit from the good is less than the marginal social cost.
B)the average social benefit is less than the average social cost.
C)the property rights on the good have been well defined.
D)private marginal benefits result in a quantity of the good that is less than socially optimal.
E)private marginal benefits result in a quantity of the good that is more than socially optimal.

Question

Quizplus · Accepted Answer

Positive externalities occur when the benefits from a good or service extend beyond the individual consumer to the society as a whole. In such markets, the private marginal benefit received by consumers is less than the total benefit to society. This causes the market to produce a quantity of the good that is less than the socially optimal level. Hence, private marginal benefits result in a quantity of the good that is less than socially optimal, as mentioned in option D.

In Markets with Positive Externalities,_____