When the Production of a Good Results in a Positive

question 475

Multiple Choice

When the production of a good results in a positive externality, the social value curve is

• A)below the demand curve, indicating that the total value to society is less than the private benefit.
• B)above the demand curve, indicating that the total value to society is greater than the private benefit.
• C)identical to the demand curve, indicating that the total cost to society is the equal to the private benefit.
• D)above the supply curve, indicating that the total cost to society exceeds the private cost.

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Definitions:

Utility

a measure of satisfaction or happiness that a person derives from consuming goods and services.

Satisfaction

The level of contentment or fulfillment received from consuming a product or service.

Usefulness

The ability or quality of being able to serve a purpose effectively or efficiently.

Utility

A term in economics that refers to the total satisfaction received from consuming a good or service.