When consumption of a good creates positive externalities,
A)the private demand curve shifts rightward
B)the private demand curve shifts leftward
C)the private demand curve is below the marginal social benefit curve
D)the private demand curve is above the marginal social benefit curve
E)the equilibrium quantity determined by the free private market is too high

Question

Quizplus · Accepted Answer

When a good has positive externalities, the social benefit is higher than the private benefit, so the private demand curve is below the marginal social benefit curve.

When Consumption of a Good Creates Positive Externalities