When a positive externality is internalized,efficiency increases by shifting the:
A)external benefit from those not involved in the market to those involved.
B)private cost from those involved in the market to those not involved.
C)private cost from those not involved in the market to those involved.
D)social cost from those not involved in the market to those involved.

Question

Quizplus · Accepted Answer

Internalizing a positive externality means that the external benefit is included in the private benefit, which shifts the benefit from those not involved in the market to those involved. This leads to a more efficient allocation of resources because the private market participants will factor in the positive externality and the socially optimal level of production will be reached.

When a Positive Externality Is Internalized,efficiency Increases by Shifting The