Scenario: Alexander and Vanessa Two individuals, Alexander and Vanessa, benefit from scientific research.Alexander's marginal private benefit from such research is given by the equation P = 200 - Q, where Q refers to the amount of research undertaken and P is the price Alexander is willing to pay for such research.Vanessa's marginal private benefit from such research is given by the equation P = 100 - Q.Suppose the marginal social cost of engaging in such research is constant at $100.
(Scenario: Alexander and Vanessa) Refer to scenario Alexander and Vanessa.If Alexander and Vanessa are the only two individuals in a society, which of the following equations correctly represents the marginal social benefit (MSB) of scientific research?
A)MSB = 300 - 2Q.
B)MSB = 100 - Q.C.MSB = 200 - Q.D.MSB = 100.

Question

Quizplus · Accepted Answer

MSB is the sum of the marginal private benefits of all individuals in a society. In this case, the marginal private benefits of Alexander and Vanessa are given by the equations P = 200 - Q and P = 100 - Q, respectively. Therefore, the MSB is given by the equation MSB = (200 - Q) + (100 - Q) = 300 - 2Q.

Scenario: Alexander and Vanessa Two Individuals, Alexander and Vanessa, Benefit