Optimal Equilibrium With Positive Externalities
Market equilibrium occurs where the quantity supplied equals the quantity demanded to establish a market price. What represents the socially optimal equilibrium point in the presence of a positive externality?
A
The equilibrium incorporating a positive externality is found on the supply curve at the lowest price acceptable to producers.
B
It is the point on the demand curve where the quantity demanded meets the lowest possible price.
C
It is the point where the supply and demand curves account for the marginal external benefit.
D
A positive externality has no effect on the market equilibrium, so the point remains unchanged.
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