A positive net social benefit indicates that, after accounting for all costs and benefits to society, the policy:

• A. Increases private profits without considering public costs
• B. Improves distributional outcomes for all groups
• C. The policy results in total social benefits exceeding total social costs as the net effect
• D. Has no effect on welfare

Answer: (C)

The main idea here is measuring social welfare by comparing all benefits and all costs to society. A positive net social benefit means that when you add up the total benefits the policy creates and subtract the total costs it imposes on everyone affected, the result is a net gain. In other words, total social benefits exceed total social costs, so society is better off overall.

This is why the best choice says there is a net gain to society from the policy. It doesn’t require that private profits rise or that everyone benefits equally, and it certainly indicates that welfare changes (it isn’t zero) in a positive direction.