With the help of the graph, it is observed that the marginal private benefit of the good is $95 and, due to a positive externality, the marginal benefit to society is $125.
In this case, the marginal external benefit created by the positive externality is $.
In the graph, represents a deadweight loss.
The deadweight loss the foregone benefit to society of the externality.
Positive externality will occur when
A. the marginal social benefit is equal to marginal private benefit
B. the marginal social benefit is equal to deadweight loss
C. the marginal social benefit is greater than the marginal cost to produce at the market equilibrium
D. the marginal social benefit is equal to marginal social cost to produce at the market equilibrium
Which of the following statements is true regarding pecuniary externalities?
A. It is a branch of the negative externality.
B. It causes market inefficiencies.
C. It leads to wrong equilibrium quantities.
D. It affects other people only through market price.
