When a positive externality is present in a market, total surplus will _______ if buyers _______.
A)increase; receive a subsidy
B)decrease; receive a subsidy
C)increase; only consider private benefits
D)increase; only consider social costs

Question

Quizplus · Accepted Answer

When a positive externality is present, total surplus increases if buyers receive a subsidy because the subsidy encourages more consumption of the good, aligning private consumption closer to the socially optimal level.

When a Positive Externality Is Present in a Market, Total