When there are positive externalities associated with the consumption of a good, we can expect:
A) the private demand curve to lie above the social demand curve.
B) the private supply curve to lie below the social supply curve.
C) the private supply curve to lie above the social supply curve.
D) the private demand curve to lie below the social demand curve.

Question

Quizplus · Accepted Answer

When there are positive externalities associated with the consumption of a good, the social benefits of consuming the good are higher than the private benefits. This means that the social demand curve, which reflects both private and external benefits, will lie above the private demand curve, indicating a higher willingness to pay for the good when external benefits are considered.

When There Are Positive Externalities Associated with the Consumption of a Good