The efficient quantity of a public good is one that a) maximizes net benefit. b)

Question

The efficient quantity of a public good is one that a) maximizes net benefit. b) minimizes total cost. c) maximizes total benefit. d) minimizes marginal cost. The marginal benefit of a public good is a) shown by a person's demand curve. b) the maximum amount that all the people are willing to pay for one more unit of it. c) the maximum amount that a person is willing to pay for one more unit of it. d) by the provider's marginal cost curve. The net benefit of a good or service is defined as the difference between the a) total benefit and total cost. b) price and average cost. c) average benefit and average cost. d) total benefit and the marginal benefit.

Explanation / Answer

1.

The efficient quantity of a public good is one that: (a) maximizes net benefit

Reason: Efficient quantity provided equals the the point where marginal cost equal marginal benefit, or where net benefit is maximized

2.

The marginal benefit of a public good is (c) the maximum amount that a person is willing to pay for one more unit of it

Reason: obtained by vertical summision of demand curves

3.

The net benefit of a good is defined as the difference between (a) total benefit and total cost

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