The correct answer is d. fails, because it underproduces the good that creates the positive externality. .

A positive externality enables a third-party to consume or enjoy benefits resulting despite not being a party to an economic transaction. The latter means that the third-party did not have to pay anything to obtain positive benefits from the transaction.

Positive externalities result from less than optimal consumption and under-production when the goods are not appropriately costed or valued in the market.Positive externalities the emerge when the production of a good or service enables favorable social benefits in addition to the private gains expected from the transaction. A social benefit emerges the benefit to society exceeds the private benefits and create a greater good result.

Positive externalities enable market success when sufficient production exists to enable optimal outputs for all of society to enjoy.

Examples of positive externalities include education and the research and development of vaccinations and healthcare treatments. However, it may also result in market failures when insufficient public goods are available or are overly consumed by freeloaders (i.e., those who do not pay for the benefits).

Answers a, b, and c are incorrect.