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The Diagram Below Shows the Marginal Benefit and Marginal Cost

Question 66

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The diagram below shows the marginal benefit and marginal cost of a public good.This economy has 3 individuals,A,B and C.The diagram shows the MB for each individual and a summation of their marginal benefits. The diagram below shows the marginal benefit and marginal cost of a public good.This economy has 3 individuals,A,B and C.The diagram shows the MB for each individual and a summation of their marginal benefits.   FIGURE 16-4 -Refer to Figure 16-4.The curve MB<sub>ABC</sub> is derived by A) a vertical summation of the marginal benefits of all individuals at each level of output. B) observation of the consumption of public goods at a price of zero. C) observation of the consumption of public goods at the optimal price. D) a horizontal summation of the marginal benefits of all individuals at each given price level. E) determining the private marginal cost of the public good. FIGURE 16-4
-Refer to Figure 16-4.The curve MBABC is derived by


A) a vertical summation of the marginal benefits of all individuals at each level of output.
B) observation of the consumption of public goods at a price of zero.
C) observation of the consumption of public goods at the optimal price.
D) a horizontal summation of the marginal benefits of all individuals at each given price level.
E) determining the private marginal cost of the public good.

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