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An
externality is a case in which production costs or the consumption benefits of a good or service spill over onto those who are not producing or consuming the good or service; a spillover cost (e.g., pollution) is called a
negative externality , a spillover benefit (e.g., literacy programs) is called a
positive externality .)
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3.12. Markets Maximize Society’s Total Surplusof a good. Hence, it is society’s marginal value curve for that good. Additionally, the market supply curve represents the marginal cost to society to produce each additional unit of that good, assuming no positive or negative externalities. (<span>An externality is a case in which production costs or the consumption benefits of a good or service spill over onto those who are not producing or consuming the good or service; a spillover cost (e.g., pollution) is called a negative externality , a spillover benefit (e.g., literacy programs) is called a positive externality .)
At equilibrium, where demand and supply curves intersect, the highest price that someone is willing to pay is just equal to the lowest price that a seller is willing to acc Summary
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