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 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) a horizontal summation of the marginal benefits of all individuals at each given price level.
D) observation of the consumption of public goods at the optimal price.
E) determining the private marginal cost of the public good.
Correct Answer:
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