Asked by Esther Sagoe on Jun 23, 2024
Verified
Positive externalities:
A) are similar to negative externalities in their ease of measuring marginal benefits.
B) are likely to be solved with the use of a Pigouvian tax.
C) are difficult to measure since marginal social benefits are hard to observe.
D) result from greater than optimal production of a good.
Marginal Social Benefits
The extra advantage obtained by society from the consumption of an additional unit of any product or service.
Positive Externalities
Benefits that are enjoyed by third-parties as a result of an economic transaction or activity, without them directly participating in the transaction.
Pigouvian Tax
A tax imposed on activities that generate negative externalities, aimed at correcting an inefficient market outcome.
- Gain familiarity with the principles of private and external benefits within the realm of public goods and shared resources.
- Appreciate the impact of positive externalities on production and consumption quantities when there is no government intervention.
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Learning Objectives
- Gain familiarity with the principles of private and external benefits within the realm of public goods and shared resources.
- Appreciate the impact of positive externalities on production and consumption quantities when there is no government intervention.
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