Question

A positive externality causes the marginal social benefit to be equal to a. the marginal private cost of the last unit produced. b. the marginal social benefit to exceed the marginal private cost of the last unit produced. c. the marginal social benefit to be less than the marginal private cost of the last unit produced. d. the marginal private benefit to exceed the marginal social cost of the last unit produced.

Answer 1

Answer:

b. the marginal social benefit to exceed the marginal private cost of the last unit produced.

Explanation:

Positive Externality-

Positive Externality occurs when production or the consumption or of the good causes benefit to the third party.

For example, when the individual consume education in order to be uplifted and get a benefit but this education also benefits the society by uplifting the whole society.

Positive externality causes the marginal social benefit to be greater than the marginal private benefit.