-If an external benefit is present, then the
A) marginal social cost curve lies above the marginal private benefit curve.
B) marginal private benefit curve lies above the marginal private cost curve.
C) marginal social benefit curve lies above the marginal private benefit curve.
D) marginal social benefit curve is the same as the marginal private benefit curve.
E) marginal social benefit is equal to the marginal social cost.

Question

-If an external benefit is present, then the
A) marginal social cost curve lies above the marginal private benefit curve. 
B) marginal private benefit curve lies above the marginal private cost curve. 
C) marginal social benefit curve lies above the marginal private benefit curve. 
D) marginal social benefit curve is the same as the marginal private benefit curve. 
E) marginal social benefit is equal to the marginal social cost.

Quizplus · Accepted Answer

When an external benefit is present, the marginal social benefit (MSB) includes not only the private benefit but also the additional benefits to society, making the MSB curve lie above the marginal private benefit (MPB) curve.

-If an External Benefit Is Present, Then the