If education creates positive externalities,then _____
A)private markets provide a quantity of education that is less than socially optimal.
B)private markets provide a quantity of education that is more than socially optimal.
C)the marginal private benefit curve is higher than the marginal social benefit curve.
D)the marginal private cost curve is higher than the marginal social cost curve.
E)the government should impose a depletion tax.

Question

Quizplus · Accepted Answer

Positive externalities mean that the social benefit of an activity is greater than the private benefit. In the case of education, individuals who receive an education also create positive spillover effects for society as a whole, such as increased productivity, lower crime rates, and better public health. However, since private individuals do not take these external benefits into account, the market will produce a smaller quantity of education than socially optimal, which means that there is a market failure. Therefore, the best choice is A.

If Education Creates Positive Externalities,then _____