If an external benefit is present in the consumption of a good or service,then
A) there can be no external cost.
B) the marginal social benefit is greater than the marginal private benefit.
C) the marginal social benefit is equal to the marginal private benefit.
D) the marginal private benefit is equal to the marginal social benefit plus the marginal external benefit.
E) the marginal external benefit is equal to the marginal private benefit minus the marginal social benefit.

Question

Quizplus · Accepted Answer

An external benefit means that there is a positive impact on society beyond the individual consuming the good or service. This means that the marginal social benefit (the total benefit to society) is greater than the marginal private benefit (the benefit to the individual consumer). Therefore, choice B is the correct answer.

If an External Benefit Is Present in the Consumption of a Good