If the consumption of good generates an external benefit, then the market equilibrium quantity will be:
A)socially optimal.
B)less than the socially optimal quantity.
C)greater than the socially optimal quantity.
D)equal to zero.

Question

Quizplus · Accepted Answer

If a good generates an external benefit, then marginal benefit to society of another unit of the good is greater than the private benefit of another unit, implying that the market equilibrium quantity will be less than the socially optimal quantity.

If the Consumption of Good Generates an External Benefit, Then