Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
They increase overall demand, leading to higher prices.
B
They result in under-consumption of beneficial goods and services.
C
They cause consumers to abandon non-beneficial purchases.
D
They have no impact on market equilibrium.
Understanding the Answer
Let's break down why this is correct
Answer
Positive externalities in consumption happen when a product or service benefits not just the person using it, but also other people around them. For example, when someone gets vaccinated, they protect themselves from disease, but they also help prevent others from getting sick. This can lead to market failure because people may not buy enough of the vaccine since they don't consider the benefits it provides to others. As a result, the market doesn't produce the right amount of vaccines, making society less healthy overall. When consumers don't see the full benefits of their choices, they may choose to buy less of something that could help everyone, which is why understanding these externalities is important.
Detailed Explanation
Positive externalities happen when a good benefits others, not just the buyer. Other options are incorrect because Some might think that positive externalities make demand go up, but that's not always true; This answer suggests that people stop buying things that aren't helpful.
Key Concepts
market failure
consumer behavior
Topic
Positive Externalities in Consumption
Difficulty
medium level question
Cognitive Level
understand
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