Asked by Esther Sagoe on Jun 23, 2024

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Positive externalities:

A) are similar to negative externalities in their ease of measuring marginal benefits.
B) are likely to be solved with the use of a Pigouvian tax.
C) are difficult to measure since marginal social benefits are hard to observe.
D) result from greater than optimal production of a good.

Marginal Social Benefits

The extra advantage obtained by society from the consumption of an additional unit of any product or service.

Positive Externalities

Benefits that are enjoyed by third-parties as a result of an economic transaction or activity, without them directly participating in the transaction.

Pigouvian Tax

A tax imposed on activities that generate negative externalities, aimed at correcting an inefficient market outcome.

  • Gain familiarity with the principles of private and external benefits within the realm of public goods and shared resources.
  • Appreciate the impact of positive externalities on production and consumption quantities when there is no government intervention.
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Sabitha SankarJun 27, 2024
Final Answer :
C
Explanation :
Positive externalities are difficult to measure since the benefits that accrue to society are not observed in the market, and so are not reflected in the market price. This means that marginal social benefits are hard to estimate accurately.