A market with a positive externality has total surplus that is _______ total surplus in a market without a negative externality.
A)lower due to deadweight loss than
B)equal to
C)higher due to deadweight loss than
D)equal to, but redistributed differently, than

Question

Quizplus · Accepted Answer

Positive externalities lead to underproduction in a market, resulting in a deadweight loss. This means the total surplus is lower than in a market without a negative externality, where the negative externality would cause overproduction and also lead to deadweight loss, but these are separate issues.

A Market with a Positive Externality Has Total Surplus That