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6 May, 09:50

If the marginal social benefit of consuming a good or a service exceeds the marginal private cost (A) a negative externality exists. (B) the market achieves economic efficiency. (C) the sum of consumer surplus and producer surplus is maximized. (D) a positive externality exists.

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  1. 6 May, 13:15
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    The correct answer is option D.

    Explanation:

    An externality can be defined as a situation in which the benefit or cost resulting from an activity is received or incurred by a third person.

    A positive externality means a third person receives the benefits of someone else's activities.

    If the marginal social benefit earned from the consumption of a good is higher than the marginal private cost incurred then in that case we can say that a positive externality exists in the market.

    People have to pay less but are having greater profit.
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