A Level Economics AQA Practice Exam

The correct answer is that social benefits beyond the primary user occur as a result of positive externalities. Positive externalities happen when the benefits of a good or service extend to individuals or groups who did not directly partake in the transaction. For instance, when someone is vaccinated, the surrounding community gains health benefits, reducing the spread of disease, even though only the vaccinated individual paid for the vaccination. This leads to a situation where the overall social benefit exceeds the private benefit to the individual consumer, enhancing overall welfare in the society. In contrast, the other statements describe scenarios not related to positive externalities. Increased pollution levels typically represent a negative externality, where the costs (like environmental degradation) fall on others rather than the consumer. Decreased consumer demand often reflects a market failure or a drop in interest for a product rather than a positive externality, while a reduction in market efficiency indicates a misallocation of resources, which can also arise from negative externalities or market power, rather than the beneficial spillovers associated with positive externalities.