(Answered) Multiple Choice Question *The ◻ curve for positive externalities reflects the benefit to the…

2. Why does private demand differ from social benefit in positive externalities?
Private demand measures benefits captured by buying consumers only. Social benefit adds private benefit plus external benefits that spill over to others. Because third-party gains are not included in private decisions, private demand lies below the social benefit curve, which leads to underconsumption relative to the socially optimal level.