A positive externality or spillover benefit occurs when:

A) product differentiation increases the variety of products available to consumers.
B) the benefits associated with a product exceed those accruing to people who consume it.
C) a firm does not bear all of the costs of producing a good or service.
D) firms earn positive economic profits.

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Rebecca Copple · Accepted Answer

Final Answer : B, Explanation :  A positive externality occurs when the benefits associated with a product exceed those accruing to people who consume it. This means that there is an extra benefit to society as a whole which is not reflected in the private benefit to the consumer. For example, a farmer planting trees on their land may provide shade and improve air quality for other nearby residents, even though those residents did not pay for the trees. This is a positive externality because the benefits (shade and improved air quality) are spilling over to others.

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