When products that create positive externalities are produced, at the market equilibrium output, the social benefit generated by consuming the product exceeds the private benefit.

Question

Quizplus · Accepted Answer

Positive externalities refer to the benefits that are received by individuals or the society as a whole, beyond what the consumer pays for the product. In this situation, the market equilibrium output results in a lower quantity than the socially optimal level, as the marginal social benefit exceeds the marginal private benefit. Therefore, the social benefit generated by consuming the product exceeds the private benefit.

When Products That Create Positive Externalities Are Produced, at the Market