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Externalities: Social Benefits and Social Costs
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Externalities: Social Benefits and Social Costs
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7. Externalities / Externalities: Social Benefits and Social Costs / Problem 5
Problem 5
In a market with positive externalities, how does the marginal social benefit curve affect the equilibrium quantity compared to the traditional demand curve?
A
The equilibrium quantity is irrelevant in this context.
B
The equilibrium quantity is lower when considering the marginal social benefit curve.
C
The equilibrium quantity is higher when considering the marginal social benefit curve.
D
The equilibrium quantity remains unchanged.
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