The total benefit from consuming a good including private benefit plus any positive spillover effects is known as what?

• A. Private Benefit
• B. Social Benefit
• C. Externalities
• D. Lorenz Curve

Answer: (B)

The main idea is that the benefit to society from consuming a good includes what the individual gains plus any extra benefits that spill over to others. When you add private benefit to these positive spillover effects, you get social benefit. For example, a person’s education brings personal gains, and a more educated population can boost productivity and innovation for everyone, which are positive externalities. The total of private benefit and these external benefits is the social benefit. Externalities describe the spillovers themselves, not the total, and the Lorenz Curve deals with income distribution, not benefits from consumption.