When an activity like education generates a positive externality, the:
A)market demand curve is below the marginal social benefit curve.
B)market demand curve is above the marginal social benefit curve.
C)marginal cost of production is below the market demand curve.
D)market will produce more than the efficient level of output.

Question

Quizplus · Accepted Answer

When education generates a positive externality, the social benefits exceed the private benefits, meaning the market demand curve (reflecting private benefits) is below the marginal social benefit curve (reflecting total benefits to society).

When an Activity Like Education Generates a Positive Externality, The