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The diagram below shows the marginal benefit of consuming, and marginal cost of providing, 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.

Short description: A graph plots quantity against marginal benefit, marginal cost. Long description: The horizontal axis representing quantity ranges from Q subscript 1 to Q subscript 4. The vertical axis represents a marginal benefit, marginal cost ranges from P subscript 1 to P subscript 4. The graph plots four lines. A line representing MC passes through the following points: (Q subscript 1, P subscript 1), (Q subscript 2, P subscript 2), (Q subscript 3, P subscript 3), and (Q subscript 4, P subscript 4). Three parallel lines, MB subscript A, MB subscript B, and MB subscript C intersect the line, MC at points, (Q subscript 1, P subscript 1), (Q subscript 2, P subscript 2), and (Q subscript 3, P subscript 3). The line representing M B subscript A B C intersects the line, MC at point (Q subscript 4, P subscript 4).

FIGURE 16-4

Refer to Figure 16-4. The curve MBABC is derived by



▸ determining the private marginal cost of the public good.

▸ observation of the consumption of public goods at the optimal price.

▸ observation of the consumption of public goods at a price of zero.

▸ a vertical summation of the marginal benefits of all individuals at each level of output.

▸ a horizontal summation of the marginal benefits of all individuals at each given price level.
Textbook 
Microeconomics

Microeconomics


Edition: 17th
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szsz
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Hareplity Author
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A year ago
Smart ... Thanks!
jodie1
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Yesterday
this is exactly what I needed
rudy.zondo
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2 hours ago
Correct Slight Smile TY
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