A positive externality generates ?
Correct answer: C. a social value curve that is above the demand curve (private value curve) for good
- A. a social cost curve that is above the supply curve (private cost curve) for a good
- B. none of these answers
- C. a social value curve that is above the demand curve (private value curve) for good
- D. a social value curve that is below the demand curve (private value curve) for a good
Explanation
With a positive externality, the good provides benefits to third parties in addition to the buyer's private benefit. Therefore, the social value curve lies above the private demand curve.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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