Which of the following is true of positive consumption externalities?
A)social value exceeds private value and market quantity exceeds socially optimal quantity
B)social value is less than private value and market quantity exceeds socially optimal quantity
C)social value exceeds private value and market quantity is less than socially optimal quantity
D)social value seldom exceeds private value and therefore social quantity is less than private quantity

Question

Quizplus · Accepted Answer

Positive consumption externalities occur when the consumption of a good or service has additional benefits that are not captured by the private value. This means the social value (private value plus external benefits) exceeds the private value. However, because these external benefits are not reflected in the market price, the quantity consumed (market quantity) is less than the socially optimal quantity, which would include the external benefits in its calculation.

Which of the Following Is True of Positive Consumption Externalities