Question

Which of the following is false?

	A.	Negative externalities raise the social cost of a good above private costs
	B.	Positive externalities raise the social benefit of a good above private benefit
	C.	In case of negative externality, marginal social cost curve is above marginal private cost curve
	D.	In case of positive externality, marginal social benefit curve is below marginal private benefit curve

Answer 1

Correct Answer:

D

Here, MSB curve will be above the MPB curve when subsidies are given to the customers in a scenario to resolve the positive externality.