Which of the following is true of a positive externality?

Question

Quizplus · Accepted Answer

A positive externality occurs when some benefits of a transaction are enjoyed by a third party who is not directly involved in the transaction. Therefore, option D is correct as it states that some benefits accrue to a third party. Options A and B are incorrect, as they both refer to the government's role in addressing externalities, but they do not correctly describe the features of a positive externality. Option C is incorrect, as positive externalities can create internal benefits as well. Option E is also incorrect, as corrective measures are not always necessary for positive externalities; sometimes they can be left to operate on their own.

Which of the Following Is True of a Positive Externality