Chapter 76, Problem 7MCQ

To determine

The marginal social benefit curve for public good.

Answer to Problem 7MCQ

From the available options, the correct option is the vertical sum of the marginal private benefit curves of all consumers.

Explanation of Solution

The marginal social benefit curve for a public good varies or is dissimilar to the demand curve for a private good which means the vertical sum of the marginal private or individual benefit curves of all consumers. Whereas, at different prices, the demand curve is the horizontal sum of the individual demand curves for the private good. Therefore, options a, c, and d are incorrect. Moreover, the demand curve of the consumer who values the public goods would be downward sloping which means this option is also incorrect.

Therefore, the correct option is b (vertical sum of the marginal private benefit curves of all consumers).

Economics Concept Introduction

Introduction: The marginal social benefit is the benefit that is obtained by the whole society as well as the individual by producing an extra unit of a product. A public good covers both non-excludable as well as non-rival.