The marginal social benefit (MSB) is obtained by adding the marginal private benefit to what?
A)The marginal private cost
B)The marginal external cost
C)The marginal external benefit
D)The marginal social cost

Question

Quizplus · Accepted Answer

The marginal social benefit (MSB) is obtained by adding the marginal private benefit to the marginal external benefit.
Key Takeaway: When any good is consumed or produced, there are always clear costs and benefits-sometimes public, sometimes private. When the costs or benefits are public, the spillover is experienced by people who are not directly involved with the consumption or production of a good. To determine the marginal social benefit of a good, use the equation: MSB = MPB + MEB (marginal private benefit + the marginal external benefit).

The Marginal Social Benefit (MSB) Is Obtained by Adding the Marginal