If a positive externality results from the consumption of higher education, what can be said of the marginal benefit students receive from education?
A) It includes the marginal external benefit.
B) It exceeds the marginal social benefit.
C) It equals the marginal social benefit.
D) It is less than the marginal social benefit.

Question

Quizplus · Accepted Answer

The marginal benefit students receive from education does not include the positive externalities (benefits to society) that result from higher education. Therefore, the marginal social benefit, which includes both the private benefits to students and the external benefits to society, is greater than the marginal private benefit received by the students alone.

If a Positive Externality Results from the Consumption of Higher