📚 Learning Guide
Positive Externalities in Consumption
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Which of the following statements accurately describe positive externalities in consumption? Select all that apply.

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Choose the Best Answer

A

Positive externalities in consumption only benefit the consumer and do not affect others.

B

Homeowners planting trees can provide aesthetic and environmental benefits to their neighbors.

C

Government subsidies for public transportation can encourage more people to use it, benefiting the community.

D

Positive externalities in consumption lead to a decrease in social welfare.

E

Education can create positive externalities by increasing the overall productivity of society.

Understanding the Answer

Let's break down why this is correct

Answer

Positive externalities in consumption occur when the benefits of a good or service extend beyond the individual consumer to others in society. For example, when someone gets vaccinated, they not only protect themselves from illness but also help prevent the spread of disease to others. This creates a healthier community, which is a benefit that goes beyond just the vaccinated individual. Another example is education; when one person gains knowledge, they can share ideas and skills, improving the overall well-being of society. Therefore, positive externalities highlight how individual choices can lead to wider social benefits, showing the importance of supporting certain goods and services for the greater good.

Detailed Explanation

None of the statements correctly describe positive externalities. Other options are incorrect because This suggests that only the consumer gains; Planting trees does help neighbors, which is a positive externality.

Key Concepts

Positive Externalities in Consumption
Marginal Social Benefits
Government Intervention
Topic

Positive Externalities in Consumption

Difficulty

medium level question

Cognitive Level

understand

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