Question

With the presence of positive externality, social benefit = private benefit + _____ benefit and social cost = _________ cost.

External: Private

Marginal: Private

External: Marginal

Marginal: Marginal

Answer 1

Answer : Option a) External : Private

When there is positive externality this means the equilibrium value produced in the market is less than what the society wants. This means that the good produced is causing external benefits to the society which makes them demand more of it. But this external benefit doesn't have any effect on the cost thus the social cost is the same as the private cost here.
So : social benefit = private benefit + external benefit

social cost = private cost