Asked by Melainah Alford on Jun 15, 2024
Verified
A positive externality is shown by a marginal social benefit (MSB) curve that is:
A) above and to the right of the demand curve for the good that generates it.
B) below and to the left of the demand curve for the good that generates it.
C) above and to the left of the supply curve for the good that generates it.
D) below and to the right of the supply curve for the good that generates it.
E) positively related to both the supply curve and the demand curve for the good that generates it.
Marginal Social Benefit
Sum of the marginal private benefit plus the marginal external benefit.
Demand Curve
A graph showing the relationship between the price of a good and the quantity demanded.
Positive Externality
A benefit that is enjoyed by a third-party as a result of an economic transaction, without them necessarily being involved in the transaction.
- Gain a clear understanding of the idea and impacts of positive externalities on the performance of markets.
Verified Answer
MM
Mohamed MohamudJun 16, 2024
Final Answer :
A
Explanation :
A positive externality occurs when the social benefit of a good exceeds the private benefit. This means that the marginal social benefit (MSB) curve is above the demand curve for the good that generates it. Graphically, this is shown as the MSB curve being above and to the right of the demand curve.
Learning Objectives
- Gain a clear understanding of the idea and impacts of positive externalities on the performance of markets.