Question

Do market demand curves reflect positive externalities? Why or why not?

Short answer

No, the market demand curve reflect only the private benefits received by the consumer.

Step-by-step solution

Content Introduction

Positive externalities benefit a third party or parties that did not purchase the product or service that generated the externalities.

Content Explanation

A market demand curve, on the other hand, does not show positive externalities because it solely reflects the private advantages obtained by the product's consumers. Positive externalities generate societal benefits, which a market demand curve captures.