A positive consumption externality occurs when:
A) Jack receives personal benefits from his own consumption of a certain good
B) Jack receives a benefit from John's consumption of a certain good
C) Jack's benefit exceeds John's benefit when they each consume the same good
D) Jack's consumption is not beneficial to John

Question

Quizplus · Accepted Answer

A positive consumption externality occurs when Jack receives a benefit from someone else's consumption of a certain good. This means that the benefits of consumption spill over to third parties who are not involved in the consumption. In this case, Jack is the third party who benefits from John's consumption.

A Positive Consumption Externality Occurs When