question archive In the case of a beneficial externality (a) marginal private cost is below marginal social cost
In the case of a beneficial externality (a) marginal private cost is below marginal social cost
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In the case of a beneficial externality
(a) marginal private cost is below marginal social cost.
(b) marginal social cost is above marginal private cost.
(c) marginal social cost and marginal private cost are equal.
(d) the free market price is below the socially efficient price.
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In the case of a positive, or beneficial, externality, the marginal social cost is less than the marginal private cost. From this, we can see that the socially optimal quantity of that good is greater than that given by the private market at every price along the demand schedule.
