Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
They decrease market efficiency and harm social welfare.
B
They have no effect on consumer behavior or social welfare.
C
They encourage more consumption of beneficial goods, improving social welfare.
D
They lead to worse outcomes for consumers and producers alike.
Understanding the Answer
Let's break down why this is correct
Answer
Positive externalities in consumption happen when a person’s consumption of a good or service benefits others who are not directly involved in the transaction. For example, when someone gets vaccinated, they not only protect themselves from illness but also help reduce the spread of disease in the community. This can lead to more people feeling safe and healthy, which improves overall social welfare. Because of these benefits, people might consume more of such goods, even if they don’t realize the full impact of their actions on others. Overall, positive externalities encourage greater consumption of beneficial services, leading to a healthier society and improved quality of life for everyone.
Detailed Explanation
When people consume goods that have positive externalities, like education or vaccines, it benefits everyone. Other options are incorrect because Some might think that positive externalities hurt the market; It's a common mistake to think positive externalities don't change anything.
Key Concepts
consumer behavior
social welfare
Topic
Positive Externalities in Consumption
Difficulty
medium level question
Cognitive Level
understand
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