Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Private costs
B
Social costs
C
Individual benefits
D
Market prices
Understanding the Answer
Let's break down why this is correct
Answer
Positive externalities in consumption occur when someone enjoys a benefit from a good or service that they did not directly pay for, leading to social benefits for everyone. For example, if someone gets vaccinated, they not only protect themselves but also help prevent the spread of disease, benefiting the entire community. On the other hand, negative externalities in production happen when a company produces goods in a way that harms others, like polluting the air or water. This leads to social costs, which are the harmful effects experienced by society as a whole, such as health problems or environmental damage. So, just as positive externalities in consumption create social benefits, negative externalities in production create social costs.
Detailed Explanation
Negative externalities in production create social costs. Other options are incorrect because Private costs are what a company pays for itself; Individual benefits focus on what one person gains.
Key Concepts
Positive externalities in consumption
Negative externalities in production
Social welfare
Topic
Positive Externalities in Consumption
Difficulty
medium level question
Cognitive Level
understand
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