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10 September, 11:13

An increase in the marginal social benefit of consuming a public good should result in A. a decrease in public production of the good B. an increase in the optimal quantity of the good C. a decrease in the optimal quantity of the good D. a decrease in the social costs associated with producing the good E. a decrease in the social costs associated with consuming the good

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  1. 10 September, 11:44
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    An increase in the marginal social benefit of consuming a public good should result in an increase in the optimal quantity of the good.

    Option B is Correct

    Explanation:

    The incremental advantage of a company perceived by society as the sum of marginal public advantages and marginal secrecy.

    For example, a customer is prepared to pay five dollars for an ice cream, which means that the marginal advantage of eating ice cream is five dollars.

    There is also a lack of deadweight in the case of a favourable externality, as the total social benefit at consumer volume is higher than the marginal social cost.

    When there is externality, the socially optimal result is not obtained. There are a number of government changes from' command-and-control' to market-based policies.
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