A positive externality exists when:
A)a person engages in an activity that has a spillover that makes a bystander better off
B)the market has only one seller
C)a firm sells its product in an external foreign market
D)a person engages in an activity that has a spillover that makes a bystander worse off

Question

Quizplus · Accepted Answer

A positive externality occurs when the consumption or production of a good or service benefits a third party, who is not involved in the transaction. This means that the good or service has a spillover effect on someone other than the buyer or seller, and this effect is positive in nature, making the bystander better off.

A Positive Externality Exists When