Asked by Florence Nichole Rogan on Jun 06, 2024
Verified
To find the social marginal benefit of public goods, one needs to:
A) sum the consumers' demand curves vertically.
B) sum the consumers' demand curves horizontally.
C) sum the marginal private benefit and the marginal external benefit for each unit.
D) sum the marginal private cost and the marginal external cost for each unit.
E) subtract the individual portion of the tax burden necessary for the government to provide the good from the demand curve of each consumer who desires the good.
Social Marginal Benefit
The additional benefit to society of consuming or producing one extra unit of a good or service, including both direct and external benefits.
Public Goods
Public goods are products or services that are non-excludable and non-rivalrous, meaning they can be consumed by anyone without reducing their availability to others.
- Highlight the differences between public goods and common property resources, with a focus on their characteristics and the challenges in their provision.
- Invoke economic theoretical frameworks to evaluate the contribution of public goods to social welfare, including insights into free-rider problems.
Verified Answer
SY
Shilpa YadavJun 10, 2024
Final Answer :
A
Explanation :
The social marginal benefit of public goods is found by summing the consumers' demand curves vertically. This approach accounts for the fact that each individual's valuation of the public good adds to the total value to society, rather than extending the quantity consumed as in the case of private goods.
Learning Objectives
- Highlight the differences between public goods and common property resources, with a focus on their characteristics and the challenges in their provision.
- Invoke economic theoretical frameworks to evaluate the contribution of public goods to social welfare, including insights into free-rider problems.